But that paragraph also fails to cite to any ad or brochure, and only refers to the same statements purportedly made by Seiscor that form the basis of the fraud claim. Moreover, with the possible exception of Exhibit 5, which appears to be a two-page description of the Raytheon "ST" series phone, none of the exhibits included in the appendix of exhibits to plaintiffs' memorandum of law appears to be a Seiscor ad or brochure.
Plaintiffs have not met their burden of presenting sufficient evidence to raise a genuine issue of fact as to the false advertising claims, and hence summary judgment will be granted dismissing those claims.
E. The Claims Against Raytheon
In his decision, Judge Broderick held that plaintiffs "must drop Raytheon as a defendant, provide information which would justify piercing the corporate veil, or specify discovery needed to establish a basis for such piercing." While Raytheon has been dropped from the Trident case, it remains a defendant in the Pay Tel case. Hence, the issue is whether Pay Tel has complied with Judge Broderick's directive.
At oral argument, counsel for plaintiffs stated that he had served discovery requests on the issue of piercing the veil, to which defendants apparently had not responded. (Tr. 37-38). Under these circumstances, I cannot decide this aspect of the motion at this time, for it is possible that this discovery may produce evidence helpful to Pay Tel. Raytheon's motion for summary judgment is denied, without prejudice to renewal in 30 days from the date of this decision. Within 20 days of this decision, defendants are to respond to whatever outstanding discovery requests there are on this issue. If Raytheon renews its motion, it is to do so on the papers that have already been filed, except that it shall file a new notice of motion. Both parties may supplement the record with whatever relevant materials are produced in the remaining discovery.
Defendants' argument that NEA is not a proper party is rejected. Judge Broderick specifically directed plaintiffs to add as a party any assignee with a claim to title. NEA apparently has such a claim, and thus it is a proper party plaintiff.
Defendants' arguments with respect to damages are three-fold: (1) plaintiffs sustained no damages because they made a profit and derived substantial revenue from the COTs; (2) plaintiffs failed to provide, as directed by Judge Broderick, specifics of any monetary injury, such as costs incurred in providing refunds or accepting reduced payment or no payment for defective goods; and (3) the claims for damages relating to phones "not purchased" are speculative.
At oral argument, plaintiffs' counsel conceded that under Judge Broderick's decision, plaintiffs are precluded from recovering damages on a "requirements contract" basis. (Tr. 25). Nevertheless, plaintiffs contend that Judge Broderick's decision does not preclude them from seeking damages for "specific orders." They then argue that Trident should be able to seek damages based on the 875 phones it ordered and Pay Tel on the 2,000 phones it ordered. (Tr. 26).
Plaintiff has presented sufficient evidence to raise genuine issues of material fact as to damages resulting from defendants' violation of plaintiffs' rights with respect to phones actually ordered. For example, Pay Tel claims to have lost income on leases that were revoked because the phones did not work, and it claims also to have refunded approximately 1,000 deposits on orders it had for location/operator agreements. (Fabrikant 9/20/94 Aff. PP 9(a), (e), (f); see also id. at p. 12). Even assuming plaintiffs derived revenue and made a profit with respect to the phones, that does not mean that they were not otherwise damaged. Moreover, while the evidentiary materials submitted by plaintiffs are still somewhat conclusory, they are sufficient to present a fair issue for trial. Accordingly, the damages prong of the motions is denied.
For the reasons set forth above, defendants' motions are granted with respect to plaintiffs' false advertising claims and otherwise denied. Defendants are directed to respond to plaintiffs' outstanding discovery demands relating to the issue of piercing the corporate veil within 20 days hereof, and Raytheon may, within 30 days hereof, renew its summary judgment motion based on its contention that the corporate veil should not be pierced. Within 10 days after Raytheon renews its motion (if it does so), Trident shall submit whatever new evidentiary materials were produced in discovery that it believes are relevant to the issue of piercing the corporate veil.
Dated: New York, New York
September 27, 1995
United States District Judge