ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

DATE: 20120814
DOCKET: CV-12-9760-00CL

BETWEEN:

SOUREN AGEMIAN, SR. Applicant – and – PACTIV LLC and NEWSPRING INDUSTRIAL CORPORATION Respondents

Antonin I. Pribetic , for the Plaintiff

Clifford Cole and Nicholas Kluge , for the Respondents

HEARD: July 30, 2012

l. a. pattillo j.:

Introduction

[ 1 ] The Applicant, Souren Agemian, Sr. (“Agemian”) seeks an injunction against the Respondents, Pactiv LLC (“Pactiv”) and Newspring Industrial Corporation (“Newspring”) restraining them, their officers, directors, employees, agents and any person acting under their instructions or control, from proceeding with, or in any way taking any steps to pursue the action currently before the United States District Court, Northern District of Illinois-Eastern Division ( the “Illinois Court”), bearing Court File No. Civil Action No. 12-CV-2331 (the “Illinois Action”).

[ 2 ] In response, the Respondents brought a motion to permanently stay the Application. At the outset of the argument, counsel for the Respondents advised that because the Respondents’ motion did not raise any different issues from the Application and the relief sought by it would effectively be obtained on a dismissal of the Application, the Respondents’ motion was withdrawn.

Background

[ 3 ] Pactiv and Newspring are related United States corporations and carry on the business of manufacturing and supplying specialty packaging products for the consumer and foodservice /food packaging markets. They are the holders of certain US design patents in respect of round and rectangular food containers (the “Patents”).

The Infringement Actions

[ 4 ] In 2007, Pactiv and Newspring commenced actions for patent infringement against, among others, Cube Plastics, Inc. (“Cube”) and Alexander Segal (“Segal”) in both the Illinois Court and the Ontario Superior Court of Justice (the “Infringement Actions”). The Infringement Actions alleged that Cube and Segal, who both resided and carried on business in Ontario, had breached the Patents by manufacturing and selling food containers.

The Settlement Agreement

[ 5 ] The Infringement Actions were subsequently resolved and a settlement agreement was entered into between the parties in November 2008 (the “Settlement Agreement”). Cube and Segal acknowledged the validity and enforceability of the Patents. The Settlement Agreement further provided that, in exchange for royalty payments, Cube would receive a three year license under the Patents at the end of which, it was required to sell the moulds and mould drawings relating to the Patented Products to the Respondents and cease manufacturing and selling products covered by the Patents.

[ 6 ] The Settlement Agreement provided that it was to be governed by the laws of Illinois and that all disputes arising under the Settlement Agreement were to be adjudicated by the Illinois Court. It further provided that it was binding on Cube and Segal’s successors and assigns.

Agemian’s Involvement

[ 7 ] On December 10, 2008, Agemian paid off Cube’s indebtedness to the Royal Bank of Canada (the “Royal Bank Debt”) and took an assignment of the debt and security held by the Bank, which included a general security agreement and a chattel mortgage against all the assets of Cube. Cube consented to the assignment.

[ 8 ] In January 2009, Agemian gave notice of default to Cube of the Royal Bank Debt and in the absence of payment moved for an order of foreclosure on the equity of redemption in the personal property of Cube secured by the assigned security agreements. By Judgment issued by the Ontario Superior Court of Justice – Commercial List and dated March 11, 2009, the equity of redemption in all of Cube’s assets was foreclosed and Agemian received exclusive title and possession of all of Cube’s assets (the “Foreclosure Judgment”).

[ 9 ] At all material times, Souren Agemian, Jr., Agemian’s son was president of Cube. Agemian Jr. signed the Settlement Agreement on behalf of Cube.

The Illinois Action

[ 10 ] In April 2012, the Respondents commenced the Illinois Action against Agemian and Cube, Segal and Corpmed Trading Ltd. d/b/a Cube Plastics (“Cube Plastics”).

[ 11 ] The Illinois Action asserts claims for willful patent and trade dress infringement, breach of contract, specific performance, declaratory judgment and quiet title over rights to certain manufacturing molds and mold drawings, fraudulent transfer and conversion.

[ 12 ] The First Amended Complaint in the Illinois Action alleges, among other things, that the defendants, including Agemian, breached the Settlement Agreement and willfully infringed the Patents by orchestrating the transfer Cube’s molds and mold drawings to Agemian in order to avoid the provisions of the Settlement Agreement and have continued to manufacture and sell products covered by the Patents through Cube Plastics after expiry of the license term.

[ 13 ] The First Amended Complaint further alleges that Cube Plastics is the alter ego of Cube and carries on exactly the same business as Cube did from the same address with the same principals, including Agemian Jr.

[ 14 ] Cube, Segal and Cube Plastics have attorned to the jurisdiction of the Illinois Court.

[ 15 ] Agemian is a resident of Ontario and has no business connections with the State of Illinois.

Jurisdiction Motion in the Illinois Action

[ 16 ] In May, 2012, Agemian brought a motion before the Honourable Judge Gary Feinerman of the Illinois Court to dismiss the Illinois Action against him on the grounds of lack of personal jurisdiction.

[ 17 ] Agemian’s motion was heard and decided on June 4, 2012. In oral reasons, Judge Feinerman dismissed Agemian’s motion. Based on the pleadings and the evidence before the court, Judge Feinerman held that the Illinois Court had jurisdiction over Agemian on two grounds. First, on the basis that by acquiring all of Cube’s personal property, accounts receivable, inventory, equipment, goodwill and intangibles, Agemain is a successor and may also be an assignee to Cube and accordingly is bound by the terms of the Settlement Agreement and particularly the forum selection provision. Second, by taking control of the moldings which he knew or should have known were subject to the Settlement Agreement, Agemian took actions which he knew or should have known would have an effect on Pactiv, an Illinois entity. Pactiv has suffered damage in the US. By inserting himself into the dispute between Pactiv and the other defendants, Agemian created the minimum contacts necessary for the Illinois Court to assume jurisdiction.

[ 18 ] On the basis of legal advice from Illinois counsel, Agemian elected not appeal Judge Feinerman’s decision.

Analysis

[ 19 ] Agemian seeks what is termed an “anti-suit” injunction from this court. Although the injunction purports to restrain the Respondents and not the Illinois Court, it in effect does both. As a result, issues of comity arise which require that this court be very cautious in issuing such an injunction: Amchem Products Inc. v. British Columbia (Workers’ Compensation Board) , [1993] 1 S.C.R. (S.C.C.).

[ 20 ] Amchem sets out the test to be applied in determining whether an anti-suit injunction should be granted. At paragraphs 50 to 56 of the decision, Sopinka J. on behalf of the Court, sets forth a two-step test that an applicant must meet in order for an anti-suit injunction to issue. First, the applicant must establish that the foreign court assumed jurisdiction on the basis that is inconsistent with the principles relating to forum non conveniens . In the event the applicant establishes the first test, the court must then go on to determine whether an injustice will result from allowing the foreign action to proceed in the foreign jurisdiction.

[ 21 ] In my view, Agemian has failed to establish either test. I do not consider that the Illinois Court has assumed jurisdiction in the Illinois Action on a basis that is inconsistent with the principles of forum non conveniens as established by our courts and as set out in Amchem . The Respondents carry on business in Illinois. The subject matter of the Illinois Action is intellectual property protected by US law. The Settlement Agreement, which was entered into by two of the four defendants, provides that the governing law is the law of Illinois and Illinois is the exclusive forum for all disputes under the Agreement. All of the defendants except Agemian have attorned to the Illinois Court. While the Illinois Action has connections with both Illinois and Ontario, given the issues raised in the Illinois Action, it cannot be said that Ontario is clearly a more appropriate jurisdiction to try the claims against the defendants, including Agemian.

[ 22 ] Sopinka J. pointed out at para. 60 of Amchem , that it is the result of the decision when measured against our principles that is important, not the reasoning. In my view, given the issues in the Illinois Action, both Judge Feinerman’s decision and his reasoning regarding the assumption of jurisdiction against Agemian by the Illinois Court accords with our principles of foreign non conveniens .

[ 23 ] Agemian submits that the Illinois Action constitutes a collateral attack on the Foreclosure Judgment. Given the issues as pleaded in the Illinois Action, I do not consider that to be the case. In any event, Agemian is free to assert the Foreclosure Judgment as a defence in the Illinois Action if he so chooses.

[ 24 ] Agemian further submits that the gravamen of the Illinois Action is enforcement of the Settlement Agreement, to which he was not a party and therefore he cannot be held to have agreed to the jurisdiction of the Illinois Court. In support of this submission, he relies on the decision in Aldo Group Inc. v. Moneris Solutions Corporation , 2012 ONSC 2581 (S.C.J.).

[ 25 ] In my view, Aldo is not applicable to this case. Aldo concerned, in part, the issue of whether a forum selection clause in a contract was binding on Aldo, who was not a party to the contract. The issue raised by Judge Feinerman’s decision in the Illinois Action is whether Agemian, as a successor to Cube, is bound by the terms of the Settlement Agreement which specifically provides that it is binding on Cube, its successors and assigns.

[ 26 ] Regardless, even if Agemian is not bound by the Settlement Agreement as a successor to Cube, the Illinois Court also assumed jurisdiction based on minimum contacts with the forum. Further, the evidence indicates that the issue of jurisdiction is not finally determined by Judge Feinerman’s decision and can be raised by Agemian as a defence in the Illinois Action.

[ 27 ] As a result, therefore, it is my view that Agemian has failed to establish the first test for an anti-suit injunction as set forth in Amchem.

[ 28 ] My conclusion that Agemian has failed to establish the first test in Amchem is sufficient to dispose of the Application. However, in the event I am wrong in that conclusion, I am also of the view that Agemian has failed to establish that he will suffer a substantial injustice if the Respondents are allowed to proceed with the Illinois Action.

[ 29 ] Injustice relates mainly to loss of juridical advantage and must be considered in respect of both the foreign plaintiff (the Respondents) and the foreign defendant (Agemian). In paragraph 55 of Amchem , Sopinka J. stated, in part:

55. When will it be unjust to deprive the plaintiff in the foreign proceeding of some personal or juridical advantage that is available in that forum? I have already stated that the importance of the loss of advantage cannot be assessed in isolation. The loss of juridical or other advantage must be considered in the context of the other factors. The appropriate inquiry is whether it is unjust to deprive the party seeking to litigate in the foreign jurisdiction of a judicial or other advantage, having regard to the extent that the party and the facts are connected to that forum based on the factors which I have already discussed. … Any loss of advantage to the foreign plaintiff must be weighted as against the loss of advantage, if any, to the defendant in the foreign jurisdiction if the action is tried there rather than in the domestic forum.

[ 30 ] The advantages to the Respondents in continuing with the Illinois Action against Agemian is that Pactiv is resident and carries on business in Illinois, US patents are involved and all of the other defendants have attorned to the jurisdiction. If they are not permitted to proceed against Agemian in the Illinois Court, they would have to commence a separate action in Ontario creating additional expense and the potential for inconsistent judgments.

[ 31 ] On the other hand, there is no evidence before me that establishes Agemian will suffer a loss of juridical advantage if the Illinois Action proceeds against him. As already noted, any defence involving the Foreclosure Judgment can be raised and dealt with in the Illinois Action by the Illinois Court.

[ 32 ] The only evidence put forward by Agemian to establish he will suffer an injustice if the Illinois Action is allowed to proceed is that he will be subjected to wide-ranging discovery and production and will incur significant expenses and legal fees without any prospect of cost indemnification.

[ 33 ] Litigation is time consuming and expensive regardless of what jurisdiction it takes place in. There is no evidence that the inconvenience and cost of defending the Illinois Action would be substantially different than if the action was brought against him in Ontario. In any event, I do not consider that those items give rise to any injustice to Agemian.

[ 34 ] Weighting the above factors, I am unable to conclude that Agemian will suffer any injustice if the Respondents are allowed to proceed with the Illinois Action against him.

Conclusion

[ 35 ] Agemian’s Application for an injunction restraining the Respondents from proceeding with the Illinois Action against him is therefore dismissed.

[ 36 ] The Respondents are entitled to their costs of the Application on a partial indemnity basis. The parties have agreed on costs of $25,000. In my view, that amount is reasonable having regard to the issues in the Application. Accordingly, Agemian shall forthwith pay to the Respondents their costs of the Application fixed at $25,000, inclusive of disbursements and taxes.

L. A. Pattillo J.

Released: August 14, 2012

DATE: 20120814
DOCKET: CV-12-9760-00CL

ONTARIO SUPERIOR COURT OF JUSTICE COMMMERCIAL LIST

BETWEEN:

SOUREN AGEMIAN, SR. Applicant - and – PACTIV LLC and NEWSPRING INDUSTRIAL CORPORATION Respondents

REASONS FOR JUDGMENT

L. A. PATTILLO J.

Released: August 14, 2012