91 nasser 2008 txt

Success also used Kids' overseas quality control inspectors and internal quality control employees. The rental reimbursements further illustrate the inadequacy of Success' payments to Kids. In its first three years of operation, Success signed license agreements to manufacture and distribute a number of brands, including Bugle Boy, Everlast, and John Deere.

In the pitches to obtain the licenses, Success used marketing materials that listed the logos of Kids and Success side by side, cited industry awards won by Kids, and touted Kids' lengthy record in the apparel business. This resulted in confusion amongst the licensors. John Deere originally drafted their license agreement with Kids as the licensee, and the document was only changed to name Success at Dweck's request. The draft agreement for a license to the Mack brand was also prepared in Kids' name.

Inside Kids' offices, Success and Kids operated so seamlessly that many of the Kids employees who routinely worked for Success never suspected that Success was a separate company or had different ownership from Kids. Kids and Success used the same showroom and displayed their brands in the same space. There were no references to Success, and nothing suggested that the brands were not all owned by Kids.

The only name on the door was Kids. Like Success, Premium was a clothing wholesaler, operated out of Kids' premises, and used Kids' employees and resources. Taxin had no equity stake in Premium. Dweck founded Premium to serve as licensee and manufacturer for the Gloria Vanderbilt brand. When Dweck originally negotiated the Gloria Vanderbilt license, the owner of the brand, Jones Apparel, understood that the license could be with Kids.

Dweck switched the agreement to Premium. Not content with her compensation from Kids and the profits from her parasitic companies, Dweck billed Kids for a luxurious lifestyle.

Fine countersigned each reimbursement check. Fine admitted at trial that part of his responsibilities included reviewing and signing off on expense reimbursements. He further admitted that he knew Dweck was seeking reimbursements for personal expenditures.

Fine nevertheless signed off on Dweck's reimbursements without conducting any review. During , Kids stopped sending Nasser quarterly financial reports. Nasser repeatedly requested the reports, but Dweck and Fine ignored him. In December, Lozovsky warned Nasser in stronger terms that there was "something going on" at Kids and that "there were other companies" operating out of Kids' offices.

To get a handle on what was going on, Nasser had Shiboleth notice formal meetings of the board and stockholders for January 5, They were the first formal meetings in Kids' history. Nasser testified that after hearing the sales figure, "everybody looked at each other. And we knew that something [was] wrong because we were not told the truth at the beginning. Because of his growing suspicions, Nasser came to the January 5 meetings ready to take action. Nasser elected Lozovsky and his nephew, Itzhak Djemal, as directors of Kids.

He appointed Djemal to the position of Vice Chairman and gave him authority equal to Dweck's: Djemal would handle production and corporate finances while Dweck would handle sales and design. Nasser privately tasked Djemal with uncovering what was going on at Kids. Dweck was extremely unhappy with Djemal's appointment. She "knew [she] couldn't work for him or with him. She decided that either she would buy out Nasser or leave Kids.

Nasser refused to sell, so Dweck prepared to leave. Dweck promptly met with Taxin and discussed the prospect of leaving Kids. With Taxin and Fine's assistance, she located separate office space for Success and Premium. More importantly, Dweck and Taxin organized a campaign to divert Kids' future orders to Success.

Over the next three months, Kids employees carried out the campaign by contacting Kids' customers on behalf of Success. The order cycle for a private label manufacturer takes approximately four to six months. It begins with a manufacturer like Kids designing and presenting samples to a retailer like Target for sale during a future season.

If the retailer decides to proceed with a specific product, then a few weeks later the manufacturer receives a "commit" specifying the quantity, size, color, and other purchase details. The manufacturer starts production when the commit is obtained, but the order does not become final and binding until months later, five to seven days before shipment, when the manufacturer issues an electronic data information form to the retailer.

In early , Kids was working to fill orders for the Fall season and had started product development and design work for the Holiday and Spring seasons. At the direction of Dweck and Taxin, Kids employees systematically switched the vendor information and customer contacts from Kids to Success, thereby ensuring that when the orders came in, they came to Success.

At the time he gave these instructions, Taxin was President of Kids. Taxin also communicated directly with Wal-Mart and Target about switching purchases from Kids to Success. Despite active resistance from Dweck, Djemal soon found evidence that Dweck was operating her own businesses from Kids' premises.

When pressed for information, Dweck admitted it but insisted that she had Nasser's permission. Djemal reported his findings to Nasser. Because Dweck disputed whether the January meetings were properly noticed, Nasser had Shiboleth notice a second round of board and stockholder meetings for March 11, The agenda for the stockholder meeting included confirming the identity of Kids' directors. The agenda for the board meeting included confirming the identity of Kids' officers. Nasser did not know that Dweck already was preparing to leave.

Shiboleth noticed the meetings to be held at Kids' offices. After arriving at Kids, Nasser and Shiboleth were asked to wait in a conference room. Samples for Gloria Vanderbilt and other brands handled by Success and Premium covered the walls. She then instructed one of her employees to remove the samples. As Nasser and Shiboleth waited, an employee entered and removed the samples without explanation. It was a less-than-adroit maneuver, but consistent with Dweck's efforts to conceal her activities.

When the stockholder meeting convened, Shiboleth proposed that Dweck stand for re-election as a director. Dweck's lawyer, Slotnick, then announced that Dweck could not serve as a director because she had a conflict of interest as a result of operating competing businesses. Nasser and Shiboleth were nonplussed. Shiboleth assumed Slotnick made a mistake, so he suggested that he and Dweck consult privately.

When they returned after fifteen minutes, Slotnick reiterated that Dweck declined to serve as a director because of a potential claim of a conflict of interest from selling competitive product from Kids' premises.

All eyes turned to Dweck, who admitted that she was selling "overlapping product" from Kids' premises. Nasser and Shiboleth were shocked: it was the first time Dweck had indicated that she was competing with Kids from Kids' premises.

During the board meeting convened immediately after the stockholder meeting, Nasser observed that Dweck should not be an officer if she declined to serve as a director. Although no longer employed by Kids after the March 11 meetings, Dweck worked out of Kids' offices until April 11, Dweck and Taxin continued their campaign to divert Kids' business to Success, and they succeeded in transferring all of the Wal-Mart and Target business from the Holiday season onward.

Kids did not receive any orders after May Dweck and Taxin also arranged for Kids' employees to join Success. In early May , Dweck and Taxin met with Kids' managers to inform them that Dweck would be operating her own companies separately from Kids and to offer them positions at her companies.

Dweck told the managers to make the same offer to the employees under their supervision. She indicated that if they chose to accept her offer, "they would receive word to pack shortly. Taxin later met with Kids' managers, reiterated the plan to leave Kids, and promised them jobs at Success. Fine met with at least one Kids employee and offered him a job at Success. On May 17, , Taxin informed the employees that May 18 was departure day.

In the early morning of May 18, Kids employees began loading a moving truck with roughly boxes of Kids' documents and materials. Fine supervised the process and attempted to conceal the move from Nasser and Djemal. Nasser, however, was tipped by a Kids employee the day before, and he arranged for Djemal and Lozovsky to arrive early at Kids' offices.

Lozovsky found the move already underway and Kids' materials loaded in the moving truck. Lozovsky called Nasser, who demanded to speak to the driver. Fine took the phone, claimed that he was a driver named "Gregory," and listened while Nasser threatened to summon the police. Djemal arrived at Kids' offices just in time to stop the truck.

He could not stop many of the former employees from taking boxes with them. A computer consultant whom Djemal hired later determined that a number of the hard drives from Kids' computers had been wiped clean. As part of the May 18 mass departure, Taxin resigned to join Dweck at Success. Fine remained at Kids until May 25, , when he too joined Dweck.

While Fine was overseeing the move and mass departure, Dweck and Taxin met with key Wal-Mart managers at Success' new offices. After Dweck explained the situation, the Wal-Mart managers expressed concern about their Fall orders. Dweck and Taxin assured the Wal-Mart managers that there would be no issues. After the meeting, Wal-Mart recognized Success as its existing supplier and no longer recognized Kids.

Dweck and Taxin then met with Target managers and achieved the same transition. To protect their customer relationships, Dweck and Taxin made sure that a handful of employees remained at Kids to fill the Fall orders. Dweck and Taxin oversaw their efforts, effectively running Kids from afar. Kids received the profits on the Fall orders. Beginning with the Holiday and Spring seasons, Success took all of the orders and profits for itself.

The employees who remained at Kids were offered jobs at Success once the Fall orders were completed. Having lost nearly all its employees and with its pipeline diverted to Success, Kids had to start over from scratch. Djemal began hiring new employees and attempted to solicit orders from the retail giants that had been Kids' customer base. He immediately encountered difficulties. The Hong Kong factory that Kids relied on for samples was working for Success and would not return his calls.

The manufacturing facilities Kids used also would not respond. When Djemal visited Wal-Mart headquarters with a new line of samples, Wal-Mart told him that Success was the recognized supplier and that Djemal would have to reestablish Kids as a new vendor. After failing for over a year to restart Kids' business, Nasser and Djemal began to search for alternatives.

Nasser and Djemal eventually settled on a joint venture with Seabreeze Apparel, a division of a company owned by Nasser. As the controlling shareholder of both entities, Nasser set the terms for the joint venture. Under the joint venture agreement executed on July 15, , Seabreeze contributed all of its pending orders and existing inventory to the joint venture. After the split with Dweck, Kids continued making interest payments on the Maubi Loan.

But rather than paying Maubi, Kids sent the funds to Woodsford. Nasser made the switch because after learning of Nasser and Dweck's dispute, Keilman refused to distribute any funds without joint instructions. Since the end of , Kids has not engaged actively in business. It has served primarily as a litigation vehicle for the parties' competing derivative claims. Kids and its principals are currently being audited by the Internal Revenue Service.

Nasser alleges that Dweck, Taxin, and Fine breached their fiduciary duties by usurping Kids' corporate opportunities.

Nasser also contends that Dweck and Fine breached their fiduciary duties by charging Dweck's personal expenses to Kids. Nasser re-styles the allegations supporting the fiduciary breaches as claims for i misappropriation of Kids' trade secrets, ii deceptive trade practices, iii tortious interference with Kids' prospective business relations, and iv conversion.

Dweck claims primarily that Nasser breached his fiduciary duties by causing Kids to make payments to Maubi and the Foreign Licensors, taking unearned consulting fees through RAJN, and engaging in post-split activities such as the Seabreeze joint venture. Dweck and Taxin formed Success and Premium, took Kids' business opportunities for their new entities, competed directly with Kids, ran their businesses out of Kids' premises, used Kids' employees, and appropriated Kids' resources.

In doing so, Dweck and Taxin breached their duty of loyalty to Kids. July 19, Allen, C. Time Warner Inc. June 6, Allen, C. Cellular Info. The doctrine "holds that a corporate officer or director may not take a business opportunity for his own if: 1 the corporation is financially able to exploit the opportunity; 2 the opportunity is within the corporation's line of business; 3 the corporation has an interest or expectancy in the opportunity; and 4 by taking the opportunity for his own, the corporate fiduciary will thereby be placed in a position inimicable to his duties to the corporation.

Dweck was a director and officer of Kids. Taxin was an officer of Kids. In these capacities, they owed a duty of loyalty to Kids. Gantler v. Stephens, A. Dweck and Taxin breached their duty of loyalty by diverting what they decided were "new opportunities" to Success and Premium, including license agreements with Bugle Boy, Everlast, John Deere, and Gloria Vanderbilt, Wal-Mart private label business, and Target direct import business.

Kids was a profitable enterprise with the financial capability to exploit each of these opportunities. Indeed, Dweck and Taxin used Kids' personnel and resources to pursue each opportunity, demonstrating that Kids just as easily could have pursued the opportunities in its own name.

After appropriating the opportunities, Dweck and Taxin operated Success and Premium as if the companies were divisions of Kids, but kept the resulting profits for themselves. By doing so, Dweck and Taxin placed themselves "in a position inimicable to [their] duties to [Kids]. Dweck and Taxin's conduct bears a striking resemblance to the continuing exploitation of corporate resources in Guth v.

Loft, Inc. In Guth, a director and the President of Loft Incorporated, Charles Guth, appropriated for himself the opportunity to purchase the secret formula and trademark for Pepsi-Cola from then-bankrupt National Pepsi-Cola Company. Guth, 5 A. Guth then operated Pepsi-Cola as a division of Loft, secretly using its employees and resources but keeping all the profits for himself.

The Delaware Supreme Court agreed that Guth breached his duty of loyalty and affirmed that Guth was required to disgorge all profits and equity from the venture to Loft. Like Guth, Dweck and Taxin established a competing company into which they channeled new opportunities, then used Kids' "materials, credit, executives and employees as [they] willed.

To defend their actions, Dweck and Taxin tried to distinguish between the private label clothing business and the branded clothing business, then argued that Kids only operated in the private label business. Supposedly this distinction left them free to take the branded business. To the contrary, Kids had an interest in the branded business. When determining whether a corporation has an interest in a line of business, the nature of the corporation's business should be broadly interpreted.

To deny this would be to deny the history of industrial development. Lawrence, A. Although Kids primarily operated in the private label business, Kids easily and readily could have expanded into the branded business. If Dweck and Taxin had felt they were getting a fair share of Kids' profits, then Kids doubtless would have done so.

Kids faced significant pressure in its private label business as major retailers tried to cut out the middleman and deal directly with overseas suppliers. Moving into the branded business would have been a natural and prudent response to the threat. It is abundantly clear that Kids could have capitalized on each of the branded opportunities taken by Success and Premium. Moreover, Success and Premium did not in fact limit themselves to branded opportunities; they also appropriated private label opportunities.

When Wal-Mart approached Kids about manufacturing men's clothing for the Wal-Mart private label called No Boundaries, Dweck and Taxin decided it was a "new opportunity" in which Kids had no expectancy. Manufacturing Wal-Mart private label brands had long been Kids' core business, and Kids had manufactured No Boundaries girls' clothing since At trial, Taxin admitted that Kids could have taken this opportunity.

When Target offered Kids the opportunity to engage in "direct importing," a process by which a company would have clothing manufactured overseas and shipped directly to Target, Dweck and Taxin again decided to take the opportunity for Success.

Taxin obtained the opportunity while visiting Target's headquarters as Kids' President on a business trip for Kids. At trial, Taxin admitted that Kids could have handled the Target direct business. At post-trial argument, Dweck conceded that Success should not have taken the Target direct opportunity.

As their next defense, Dweck and her colleagues claimed that Nasser gave Dweck permission to compete. According to Dweck, she approached Nasser before forming Success and disclosed that she was planning to start a company that would compete with Kids. In her direct testimony, she claimed to remember "very vividly" a meeting with Nasser in February , at his offices, when she sat with him at "a little round table by the window. She asserted that she brought with her an unsigned, draft letter dated February 22, , that she allegedly prepared, then decided not to send, then chose to use as a list of discussion points when meeting with Nasser in person.

She supposedly "went to [Nasser] and discussed every single point. She recalled telling Nasser that "I'm not motivated to kill myself, continue to work, you know, so many hours a day and weekends, and therefore I would take any new opportunities outside of Kids. According to Dweck, this statement gave her the go-ahead to use Kids' employees and Kids' resources to run a business out of Kids' offices that competed directly with Kids. Dweck's trial testimony conflicted with her sworn interrogatory response, in which she averred that the February 22 letter was sent to Nasser on or about February 25 and that she could not recall the method of transmittal.

The interrogatory response did not mention anything about a face-to-face meeting with Nasser. On cross-examination, Dweck admitted that at the time she drafted the letter, Nasser was out of the country, likely in Tel Aviv.

She admitted never discussing with Nasser what new opportunities she might pursue. She admitted never suggesting to Nasser that she would take opportunities from Wal-Mart or Target, Kids' largest customers. She admitted never mentioning that her business would operate from Kids' premises, use Kids' resources, or compete with Kids. Nasser did not recall any meeting or conversation with Dweck. Instead, he remembered a call from Shiboleth, who told him that Dweck wanted to start her own business.

After Nasser expressed concern that Dweck's new venture would compete with Kids, Shiboleth assured him that Dweck planned to operate in the upscale department store market. This would have differentiated Dweck's new company from Kids, which sold almost exclusively to discount retailers.

Having been assured that Dweck's business would not compete with Kids, Nasser offered to help Dweck and told Shiboleth to advise her on how to set up the business. Taxin's trial testimony comported with Nasser's account. Taxin testified that when he asked Dweck whether she had disclosed their plan to start a new company to Nasser, Dweck answered that Nasser told her "it's fine, so long as you're not competing with me.

The defendants do not directly dispute the application of Delaware law. Therefore, the defendants' argument is unavailing. In the circumstances, it is clear that this court should order specific enforcement of the settlement agreement, including the stipulation of dismissal of the New York action.

Indeed, "[e]quity respects the freedom to contract, and dictates that both [parties to the settlement] should receive the benefit of their bargain through specific performance.

The defendants argue that "the parties never reached any agreement and indeed never even negotiated concerning the terms of any stipulation of dismissal. Foremost, Shiboleth made clear at his deposition that there was no dispute concerning the content of the stipulation or the releases.

If the issues identified by the defendants were, in fact, so contentious, they would have arisen in the negotiations and any disagreement would have precluded the settlement. In addition, contrary to the defendants' belated concerns, the settlement agreement clearly provides for the dismissal with prejudice of the New York action.

This addresses the defendants' arguments regarding the application of the stipulation over those parties not named in the stipulation of dismissal. Even the parties not [46] named in the stipulation of dismissal will be parties to a dismissal with prejudice of a substantially similar action. In addition, the mere fact that the parties did not include copies of the stipulation or releases with the settlement agreement is not a bar to specific enforcement.

The plaintiffs assert that the defendants necessitated the motion to enforce the settlement in bad faith and acted improperly in connection therewith. The plaintiffs cite the defendants' failure to produce Shiboleth's February 15 letter, despite it being responsive to their March 18 document requests, as well as several inconsistencies in Nasser's representations to this court.

Each party shall bear its own costs. The parties are directed to confer and submit a form of order within 10 days. These entities are owned by Dweck and are the corporations Nasser alleges improperly competed with Kids.

Kevin Taxin and Bruce Fine are third-party defendants in this action and former employees of Kids. Albert Nassar and Kids Int'l Corp. Success Apparel LLC et al. Index No. The parties agreed to stay the New York action pending the entry of a final judgment in this court. On September 16, , Dweck filed an unsuccessful motion for a temporary restraining order seeking, among other things, to limit Nasser's ability to divert funds from Kids.

Wachtel Aff. Nasser Dep. He testified that "[w]hat I meant is make the settlement and let me know. I will sign. I never authorized anybody in my life that will sign instead of me without my authority, and this is used all over the world. I don't know your laws here, and therefore, they may take it the way they want. Nasser also testified that he could not remember exactly what he told Shiboleth or Heyman.

Despite Heyman's more significant involvement in the negotiations at this point, he testified that Shiboleth was still the settlement attorney and "remained the point person. The parties also resolved to have an arbitrator determine whether the companies should be valued collectively or independently. As an aside, since Nasser is in business with some of Dweck's brothers and is familiar with her family, one of Dweck's brothers, Ezra Dabah, spoke with Nasser over the weekend and Nasser agreed to a floor and a cap on the damages.

Dweck, however, agreed to drop the cap provision entirely before learning of Nasser's concession and the cap provision was removed from the final settlement agreement. Heyman contacted Wachtel in order to have Taxin execute the agreement because Heyman "did not want to be in the position of the other side being able to get out of the agreement on the basis that Mr.

Taxin had not signed it. The final settlement agreement sent at p. Several of the misstatements identified by Nasser in his December 3 email were in the supplemental agreement.

The parties made the necessary revisions to the supplemental agreement in the beginning of December and planned to further revise the agreement in January. This second round of revisions was never completed, however, after the January 30, letter, as described below, was sent. Shiboleth Dep. These additional revisions were only addressing minor errors and did not constitute any material changes in dispute among the parties.

Moreover, Shiboleth testified there was never any dispute as to what would be in the release or stipulation of dismissal. The letter gave the following seven examples: 1 ". You were pleasantly surprised to hear that I had just concluded with Bill that there will be no cap on damages payable by her and proceeded to ask me when I will be getting the agreement signed by her;" 2 "Furthermore, two days later, you asked me again what is happening with Gila's signature and I notified you that Bill had notified me that a deal is a deal and both Kurt and I will have the signed agreement without delay.

You added that when Kurt and I will tell you to sign the agreement you shall do so. I told you that I do not see any problems in getting their consent, your answer was to get their consent first and execute the Settlement Agreement second;" 7 ". The revised Supplemental Agreement was sent to you for your comments hoping that upon my return from Poland I would try to convince Bill Wachtel to agree to the additional changes knowing that if he declines, the deal as was agreed upon before will stand.

Nat'l Fire Safety Counsellors, A. Schaltenbrand, F. Townsends, Inc. Enjay, A. Magness Const. Despite being listed as a live witness in the pre-trial order, Shiboleth did not appear at the hearing and instead traveled to Tel Aviv. In an attempt to secure his attendance, the plaintiffs' counsel "asked defendants' counsel whether they would produce him, and they said they would not.

In addition, the defendants' counsel refused to contact Shiboleth and stated they would oppose a subpoena. While the plaintiffs made no formal effort to procure Shiboleth's attendance, it is clear that the defendants could have assisted in getting Shiboleth to appear at the hearing.

Indeed, Nasser testified that he was in contact with Shiboleth immediately before the hearing, including as soon as the morning of the hearing. While drawing no conclusions from Shiboleth's absence, this court notes the defendants' clear ability to secure his attendance.

Did you ever tell Bill Wachtel on November 19 that once the. I didn't use that terminology, but after I spoke to Albert, and he told me that. For the sake of completeness, this court must note the Nasser's nephew, Itzhak Djemal, was entirely unconvincing as a witness at the hearing. According to Djemal, Shiboleth told him that he had gotten the requisite authority from Nasser.

As discussed above this is inconsistent with Shiboleth's far more credible testimony. In addition, Djemal testified that he told Nasser that Shiboleth thought he had the authority and that Nasser rejected this idea.

Djemal even testified that he confronted Shiboleth on this matter and that Shiboleth replied "[w]ell, I think I have it and don't worry. I will deal with it later. Shiboleth has a clear personal and economic incentive to protect Nasser in this action. Indeed, in his February 18 letter, Shiboleth states: "I am not going to volunteer this information, however I do not see any way out of telling the truth in court if I am subpoenaed.

Specifically, the defendants cite section 9. Each Party hereby waives any claim by reason of a conflict of interest or lack of impartiality on the part of SYRZ and that SYRZ shall not be liable to any Party for any act or omission on its part. Section 4. This language was clearly inserted to preclude Dweck and the other plaintiffs from citing Shiboleth's prior representation of the parties as an excuse to avoid the settlement agreement.

As Heyman testified: "I knew that Mr. Shiboleth had a relationship with Ms. Nasser and Kids. And I thought he was essentially trying to make sure that he was protected from any claim of conflict by the Dweck side. In fact, Michael Friedman, an attorney at Shiboleth's firm, inserted the "mediator" language and at his deposition stated that it was intended to exculpate the Shiboleth firm.

Moreover, Nasser reviewed this provision and, after discussing it with Heyman, did not have any objections. Further evidence that Shiboleth served as Nasser's attorney in the settlement negotiations is found in another provision of the settlement agreement, which states "[t]he Dweck Parties shall pay the fees of William Wachtel Intraplantar injection of tetrahydrobiopterin induced nociception in mice.

Anxiety- and depression-like phenotype of hph-1 mice deficient in tetrahydrobiopterin. DOI: GCH1 gene variants, tetrahydrobiopterin and pain. Pain , 5, Impaired behavioural pain responses in hph-1 mice with inherited deficiency in GTP cyclohydrolase 1 in models of inflammatory pain. Mol Pain Neuropharmacology , 67,