Page 1
var etl A! ° 25 RWK-0971 eo.
COLE, SCHOTZ, MEISEL,
FORMAN & LEONARD | [03
A Professional Corporation’ ee cree es 25 Main Street RE eee Hackensack, New Jersey 07601
(201) 489-3000
(201) 489-1536 Telecopier Attorneys for Tnppe Manufacturing Company, Plaintiff
UNITED STATES DISTRICT COURT
TRIPPE MANUFACTURING COMPANY, FOR THE DISTRICT OF NEW JERSEY an Illinois corporation, >: (NEWARK) Plaintiff, : CIVILACTIONNO, O3cv 1905" v. : Civil Action NILES AUDIO CORPORATION, a F lorida : COMPLAINT FOR DECLARATORY corporation, . AND PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF Defendant.
Plaintiff, Tnippe Manufacturing Company, an Illinois corporation, for its Complaint for Declaratory and Preliminary and Permanent Injunctive Relief against Defendant, Niles Audio . Corporation, aF lorida corporation, states as follows:
NATURE OF ACTION
I, In this action, Plainnff, Trippe Manufacturing Company, seeks (1) a declaration pursuant to 28 U.8.C_A. § 2201 that it is not bound by the arbitration clause (the “Arbitration Clause”) contained in the Exclusive Distnbutor Agreement (the “Distributor Agreement”) entered into by and between Niles Audio Corporation and The Audio Group, Inc. and SL Waber, Inc. (“Waber™), and (2) a preliminary and permanent injunction enjoining Niles Audio Corporation from pursuing its claims agains Trippe before the American Arbitration Association (“AAA”).
409560001 -1 28948841
Page 2
. : . | _ Case aneorg Document 1 Filed “eo - Page 2 of 10 PARTIES, JURISDICTION AND VENUE
2. Plaintiff, Trippe Manvfacturing Company (“Trippe” or “Plaintiff’), is a citizen of the State of Ilmois because it is an Illinois corporation, with its principal place of business in Chicago, Illinois. Trippe manufactures, distributes and scils innovative power surge protection devices, including UPS systems, AC and dateline surge suppressors, line conditioners, cabling and connectivity products and network management accessories.
3. Defendant, Niles Audio Corporation (“Niles Audio”), is a citizen of the State of Florida because it is a Florida corporation, with its principal place of business im Miami, Florida. Niles Audio manufactures, cither directly or through the use of sub-contractors, loudspeakers, multi-channe] amplifiers, multi-channel pre-amplifiers, multi-room speaker selection systems, and other consumer oriented audio and video custom installation products which it sells to dealers and distributors.
4, This Court has jurisdiction over this action pursuant to 28 U.S.C. §1332 in that diversity of citizen exists between the parties, who arc citizens of the States of Illinois and Flonda and the matler in controversy exceeds the sum of $75,000, exclusive of interest and costs.
5. Personal jurisdiction over Niles Audio is proper in this matter because Niles Audio inttiated arbitration proceedings against Plaintiff before AAA in New Jersey and this State has the most significant contacts with the causes of action herein alleged.
G. Venue ts proper in this judicial distriel pursuant-to 28 1.5.C. §1391(b) because a substantia] part of the events giving risc to the action occurred in this district and because Niles Audio resides here.
BACKGROUND
7. On January 29, 1998, Niles Audio and Waber, which, until August 2001, designed and manufactured power supplies and surge protectors, entcred into the Distributor 2 4036/0001 -1 2R9488v1
Page 3
Agreement.’ Trippe is not a signatory to the Distributor Agreement, and has never been | affiliated with Waber.
8. Under the terms of the Distributor Agreement, Waber was obligated to, inter alia, manufacture propnetary power strips and surge protection devices, which were to bear Niles Audio’s trademarks and be sold and distributed by Niles-Audic.
9. The Distributor Agreement further provided that Waber could not, in connection with the sale of its assets, assign its nghts and obligations thereunder unless the successor agreed “in writing to be bound to all the terms and liabilities of this Agreement.” Any assignment in contravention of paragraph 12(e) was rendered “null and void,” (Distributor Agreement, qj 12(e)).
10, The Distnbutor Agreement contains an arbitration clause (the “Arbitration Clause”) which provides, in relevant part: “[aJll disputes, claims, and controversies arising under this Agreement, or a breach thereof, shall be resolved by arbitration through the American Arbitration Association in accordance with its rules and regulations. Such arbitration shall be held in the State of New Jersey.” (Distributor Apreement, {] 12(f)).
11. In contravention of the Arbitration Clause coniained in the Distributor _ Agreement, in or about 2001, Niles Audio filed a six-count complaint (the ‘“Lawsuit”) against SL Industries, Inc. (“SL Industries”), Waber’s alleged parent corporation, and Condor D.C. Power Supplies, Inc. (‘Condor’), a wholly owned subsidiary of $1. Industries,. ansing out of:
(1) Waber’s alleged breach of its obligations under the Distributor Agreement, (2) Waber’s purported assignment to Condor of its manufacturing and warranty obligations under the Thistiributor Anreement, (3) 5L Industries and Condor’s concealment of certain alleged false
representations made by Waber to Niles Audio, and (4) Waber’s allcged fraudulent transfer of its
Trippe will provide Niles Audio with a copy of the Distributor Agreement upon entry of a
40936/000 | -1289488v]
Page 4
‘Case aneorg Document: 1 Filed “or Page 4 of 10 assets to SL industries and Condor.’ In the Lawsuit, Niles Audio asserted claims for common law fraud (Count 1), fraudulent transfers (Count II), federal unfair competition (Count II), common law unfair competition (Count TV), violation of the Flonda Deceptive and Unfair Trade Practices Act (Count V) and tortious interference with contractual relations (Count VD.
WABER’S SALE OF ITS ASSETS TO TRIPPE
12. While the Lawsuit was pending, on August 29, 2001, Waber, as seller, and Trippe, as buyer, entered into an asset purchase agreement (the “Asset Purchase Agreement”).’ Under the Asset Purchase Agreement, Trippe purchased Waber’s right, title and interest in and to those assets specifically set forth in Paragraph 1.1 of the Asset Purchase Agreement. (Asset Purchase Agreement, § 1.1).
13. Trippe also assumed, as spectfically set forth in Paragraph 1.3 of the Asset Purchase Agreement, certain liabilities and obligations of Waber, including its general warranty obligations for products manufactured by Waber for ils customers, including Niles Audio, (Asset Purchase Agrecment, [ 1.3}. Waber did not assign, and Tnppe did not assume, any of Waber’s obligations under the Distributor Agreement. (Asset Purchase Agreement, ] 1.3).
14. Recognizing that Tnppe had nol assumed Waber’s obligations under the Distributor Agreement, on February 26, 2002, Stuart Streger, Vice-President of Finance and Opcrations of Niles Audio, sent a letter to James C. Folk, a representative of Trippe, requesting thal Trippe agree to be bound by the Distributor Agreement. (A truc and accurate copy of the mutually agreeable protective order, ? ‘The Lawsuit, which was filed in the United States District Court for the Southern Distnet of Florida, Miami Division, is styled as Niles Audio Corporation v. SL Industries, Inc. and Condor D.C, Power Supplies, Inc., Case Number 01-0061-CTV.
; Trippe will provide Niles Audio with a copy of the Asset Purchase Agreement upon entry ofa mutually agreeable protectrve order.
40936/0001] -E28O428y1
Page 5
_ Case 0 -ev 01 OMG Document 1 Filed “ere ‘Page 5 of 10 letter dated February 26, 2002 is attached hereto as Exhibit A). Tnppe did not respond to this letter, and never agreed, in writing or otherwise, to be bound by all the terms and liabilities of the Distributor Agreement.
NILES AUDIO’S DEMAND FOR ARBITRATION
15. On information and belief, the District Court presiding over the Lawsuit granted SL Industries and Condor’s Motion to Compel Arbitration and ordered that Niles Audio pursue. its claims, if at all, before AAA.
16. Thereafter, on or about December 17, 2002, Niles Audio filed its demand for arbitration {the “Demand”) with AAA, naming SL Industnes, Waber, Condor and Trippe as respondents (the “Arbitration Proceedings”).*
17. Despite the fact that Trippe is not a party, much less a signatory, to the Distributor — Agreement, Niles Audio contends that Trippe is bound to the Arbitration Clause contained therein because “[o]n information and belief Trippe purchased asset of Waber, and from that point forward became successor-in-interest to Waber with respect to Niles [Audio].” (Demand. for Arbitration, {] 7).
18. Inthe Demand, Niles Audio claims that Trippe breached the Distributor Agreement (Count V) and seeks, infer alia, a declaration that Trippe is bound by the Arbitration Clause and damages in excess of § 1,000,000.00 [rom Trippe and the other respondents. A preliminary hearing before AAA 18 scheduled on April 30, 2003.
* Trippe will provide Niles Audio with a copy of the Demand upon entry of 4 mutually agreeable protective order.
40936/0001-1289488v]
Page 6
|
FIRST CLAIM FOR RELIEF
(Declaratory Relief Pursuant to 28 US.C.A. 2201) 19, Plaintiff repeats, realleges and imcorporates Paragraphs 1 through 18 as if fully set forth herein,
20. —- Trippe is not a party or a signatory to the Distributor Agreement and did not assume Waber’s obligations contained therein. Accordingly, Trippe contends that it is not bound by the Arbitration Clause. Niles Audio asserts that Trippe is bound by the Arbitration Clause because “‘[o}n information and belicf Trippc purchased assets of Waber, and from that point forward became successor-in-interest to Waber with respect to Niles [Audio] .’ (Demand for Arbitration, { 7).
21. A party reluctant to arbitrate has a right to a judicial determination of its Obligation to arbitrate.
22. The Arbitration Proceedings are currently pending before AAA, and a preliminary hearing is schcduled on April 30, 2003. As such, there is a concrete possibility that the AAA panel] will compel Toppe to arbitrate in the absence of a judicial determination as to arbitrability.
23. Trippe’s nght to a judicial determination as to the arbitrability of Niles Audio’s claims against il 1s placed im real and immediate danger by the Arbitration Proceedings.
24. ‘The threai to Toppe posed by the pending Arbitration Proceedings is of sufficient immediacy and reality to warrant judicial resolution at this time. Under these facts, an actual controversy now exisis between the ‘I rippe and Niles Audio relating to whether Trippe is bound by the Arbitration Clause contained in the Distributor Agreement.
WHEREFORE, Plaintiff, Trippe Manufacturing Company, respectfully requests that the Court enter declaratory judgment in its favor and against Defendant, Niles Audio Corporation, as follows:
40936/000] -1289486v]
Page 7
- Case moeee"e Document 1 Filed “e Page 7 of 10°
(1) Declaring the respective nghts and duties of Trippe and Niles Audio regarding the arbitrability of Niles Audio’s claims against Trippe;
(2) Declaring that Trippe is not bound by the Distnbutor Agreement and thus has no obligation to Niles Audio to arbitrate the claims raised by Niles Audio in the Arbitration Proceedings;
(3) Awarding Trippe its costs, expenses and attorney’s fecs incurred herein; and
(4) — Granting such other and further relief as the Court deems just and proper.
SECOND CLAIM FOR RELIEF
(Preliminary And Permanent Injunctive Relief Against Niles Audio)
25. Plaintiff repeats, realleges and incorporates Paragraphs 1 through 24 as if fully set forth herein.
26. As herein alleged, Trippe is entitled to a declaration of its nghts with respect to the Arbitration Proceedings and a declaratory judgment that it is not, in fact, bound to arbitrate with Niles Audio in the Arbitration Proceedings. Thus, Trippe will likely succeed on the merits of its claim against Niles Audio.
27. The harm sustained by Trippe would be irreparable per se if the Court were to abdicate its responsibility to determine the scope of the AAA’s jurisdiction and compel Trippe to submit to AAA’s own determination of its authority when it has not agreed to do so.
28. 9 The balance of the hardships militates in favor of Trippe. Ifthe injunction sought by Trippe is granted, a judicial remedy may still be available to Niles Audio, In addition, Trippe generally was not involved in the cvents at issuc in the Arbitration Proceedings and will have nothing to add to the Arbitration Proceedings by way of testimonial or documentary evidence, Under these circumstances, Niles Audio will not be harmed if the arbitration with respect to ‘Trippe is enjoined.
40936/0001 -1289488y 1
Page 8
. Case eee Document 1 Filed oagypoos Page 8 of 10.
WHEREFORE, Plaintiff, Trippe. Manufacturing Company, respectfully requests that the Court enter judgment in its favor and against Defendants, Niles Audio Corporation and American Arbitration Association, as follows:
(1) Enjoining Niles Audio from pursuing any claims against Trippe in the Arbitration Proceedings;
(2) Compelling AAA to dismiss Trippe as a party in the Arbitration Proceedings, and
(3) Granting Trippe any other and further relief as the Court deems just and equitable. Respectfully submitted, COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A.
Attorneys for Plai tiff, Trippe © ompany Randi W. Kechman (RK 0971) Court Plaza North 25 Main Street Hackensack, New Jersey 07601
(201) 489-3000
- and - Nathan H. Lichtenstein Paul A. Greenberg ARONBERG GOLDGEHN DAVIS & GARMISA One IBM Plaza, Suite 3000 Chicago, Illinois 6061]
(312) 828-9600 DATED: April 29, 2003 40936/0001 - 12894881
Page 9
Case 2:03-cv-01905-DMC Document 1 Filed 04/af@O003 Page9 of 10
BLimOING Hich Fineiity anD ABCHITECTURES VIA EXPRESS MAIL February 26, 2002 James C. Folk Trippe Manufacturing Corporation 1111 West 35" Street Chicago, Illinois 60609 Dear Jim:
T have had to delay getting back to you concerning your February 12™ fax to me because I wanted one of our lawyers to advise me about possible legal issues concerming the - warranty registration and connected equipment guarantees. I finally received the response late this week, which I include with this letter, because you may find it of interest.
Concerning the number of registration cards, we received approximately 4% of the registration cards from customers (information enclosed) who purchased the . approximately 15,800 units that Niles sold. The card served multiple functions: warranty registration and connected equipment guaranty registration (although our lawyers advise that it is undetermined whether this distinction makes a difference). In addition, information on the registration cards is used for marketing purposes. With regard to your inquiry about the quantity of each part Niles has in stock, Niles possesses a limited number of completed units that it purchased from Waber, but which it does not intend to sell to customers. Those units are not subject to any agreement with Waber, and as such are of no consequence to Trippe.
Specifically, our lawyers advise that the company’s auditors will require us to obtain assurance that Tnppe will fully honor the full assignment of Waber’s nghts and obligations to Niles, so that we are assured that Trippe will continue to answer the Niles to}! free telephone support line for receiving consumer claims, complaints and comments, and will honor and wil! handle all limited lifetime product warranties and connected equipment guarantees covering the Niles iPower® products manufactured by or for S.L. Waber, Inc., and sald to Niles.
While you and | have discussed Niles’ concem about this matter, there has been no definitive acknowledgement by Trippe. To facilitate the confirmation, I enclose with this Niles Audio Corporation 1S) So tah Sheet Mian, Flonda 33186 Mail; PO. Box 160818 Miami, Flonda 33116 ‘ksi ley) 238-4475 Fas: 05) 238-0185 Internet: hitovwww. nilesaudie.com
Page 10
, Case 2:03-0v-0190ggic Document 1 Filed Te Page 10 of 10
- +
oS geen C-Rgtk ——————--.--_ -- Trippe Manufacturing Corporation February 26, 2002.
Page 2 of 2
letter a sample of the form of confirmation that our lawyers advise that Niles needs in order to be assured that Tnppe will honor its contractual obligation to Niles. If our understanding is incorrect, we need to determine any basis for Trippe to disclaim its responsibilities and obligations.
Jim, I appreciate your February 12” inquiry, and hope that we can finalize the confirmation, expeditiously. I’m sure that you understand that we simply cannot allow
this matter to drift.
_ Very, at yours, . wd bye Vice-President, Finance tions Niles Audio Corporation , 5S/ec
Enclosure
Back to 
