PHILADELPHIA – In a dispute closely watched in the customs brokerage, produce, logistics and seaport industries, a federal judge has dismissed a multi-count lawsuit that the long-time dominant customs broker at the Port of Philadelphia had filed against an upstart competitor.
Following a three-day non-jury trial, U.S. District Court Judge L. Felipe Restrepo, who referred to the case as “broker wars,” ruled that the claims by Ozburn-Hessey Logistics (OHL) were meritless. Judge Restrepo dismissed all counts against a company founded by former Ozburn-Hessey executive Lawrence Antonucci Jr., which carried the brand name of its West Coast licensing partner, J&K Fresh.
“In February of 2012, OHL found itself face-to-face with a new competitor that was staffed by former OHL employees and armed with the J&K Fresh brand. That was a serious competitive threat. OHL responded by filing a lawsuit,” said Barbara Gotthelf, a Philadelphia-based litigation partner at McCarter & English, who represented J&K Fresh, LLC. “The judge properly saw that the OHL employees were gifted and skilled workers who had the right to compete, and they did so in a way that was fair and honest. The J&K Fresh name is strong on the East Coast, and we are happy that the brand has been untethered from this litigation.”
Gotthelf noted that the stakes were high because perishables—the specialty of 721 Logistics and the OHL division that Antonucci ran before leaving the company in 2009—constitute such a significant portion of the goods shipped through Philadelphia’s port.
After his non-compete with OHL expired, Antonucci founded 721 Logistics LLC in January 2012 and hired a group of former OHL colleagues as part of his start-up workforce of fewer than 10 employees, compared to OHL’s more than 6,000. To achieve name recognition, he entered into a licensing agreement with California-based J&K Fresh, LLC, which is well-known in the customs brokerage business but had no ability to clear customs on the East Coast. OHL sued 721 Logistics and J&K Fresh, LLC alleging unfair competition, tortious interference with contracts, misappropriation of trade secrets and civil conspiracy.
“Moroccan clementines, Peruvian grapes and New Zealand kiwis travel an Odyssean journey to arrive on United States grocery-store shelves,” Judge Restrepo wrote. “Among other obstacles, there is customs clearance: When imported perishable goods reach U.S. shores, they must be inspected, documented and approved … before they are shipped to their final destinations.”
“On the basis of … [trial] testimony, I find that there was no advance conspiracy to cripple OHL’s perishables division by hiring away its key staff,” Restrepo wrote—rather, 721 Logistics sought simply “to obtain the services of particularly skilled and gifted employees … [for] legitimate business reasons.”
In addition to Gotthelf, McCarter’s trial team included Philadelphia-based associate Joshua Roberts and Newark-based employment law litigation partner Adam Saravay. Steven K. Ludwig of Fox Rothschild’s Philadelphia office represented 721 Logistics. Brian A. Casal of Buchanan Ingersoll & Rooney represented OHL.
Source: McCarter & English
