Case Name: State of New York, Respondent, v. Carvel Corporation et al., Defendants, and Herbert F. Roth, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1981-11-24
Citations: 84 A.D.2d 727
Docket Number: 
Parties: State of New York, Respondent, v Carvel Corporation et al., Defendants, and Herbert F. Roth, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 84
Pages: 727–730

Head Matter:
State of New York, Respondent, v Carvel Corporation et al., Defendants, and Herbert F. Roth, Appellant.

Opinion:
Resettled order, Supreme Court, New York County (Myers, J.), entered April 21, 1980 denying the motion of defendant-appellant Roth to dismiss the complaint for failure to state a cause of action or, in the alternative, for summary judgment, in this action by the Attorney-General pursuant to article 22 of the General Business Law, seeking injunctive relief and civil penalties against defendants for their alleged violation of the General Business Law (the Donnelly Act) which prohibits contracts or agreements for monopoly or in restraint of trade, affirmed, without costs or disbursements. Giving plaintiff the benefit of every reasonable inference to be drawn from the complaint (see Westhill Exports v Pope, 12 NY2d 491), we find that Special Term correctly denied defendant Roth's motion to dismiss it. Paragraph 18 of the complaint alleges that all the defendants engaged in conduct that violated the Donnelly Act. Paragraph 19 alleges particular conduct including illegal tying and exclusive dealing arrangements, attempts to monopolize and price fixing. Paragraph 20 alleges specific practices of the defendants to further this conduct, including: "exercis[ing] inordinate control over the businesses of Carvel franchisees * invadLing] and disrupting] lawful meetings at which franchisees were attempting to organize support for franchise legislation pending in the Congress of the United State's usfing] Carvel's dominant economic position over its franchisees, by employing fear, threats, harassment". In its course of identifying each defendant by a separate subparagraph of paragraph 2, the complaint identified Roth as a director and an attorney for Carvel. Not all of Carvel's directors were named as defendants and Roth is a sometimes outside attorney for Carvel, acting as attorney, in his own words "on occasion in some (but not all) lawsuits in which it may be defendant or plaintiff". In none of the activities hereinafter described was Roth alleged to have been acting either as a director or as an attorney for Carvel. An affidavit of a Deputy Assistant Attorney-General, a witness to the events, particularizes the conduct of Roth alleged to be in furtherance of the Donnelly Act violation. An organization of Carvel franchisees had been formed to discuss grievances against Carvel and its practices and to support pending legislation to protect franchisees. A meeting of the group at a Queens College building was called. No representatives of Carvel were invited. When the franchises began arriving, Roth was seen with two men, Wojda and Urezzio, in the lobby of the building. Urezzio was confronting the Carvel dealers as they entered, warning them not to attend the meeting, that they were jeopardizing their relationship with Carvel and were risking serious consequences to their business. Roth went past the registration desk into the meeting room. He was seen standing in front of the room, repeatedly and loudly demanding that he be allowed to attend the meeting and address the group. He was repeatedly asked to leave but persisted in staying. He attempted to find out the names of the dealers who were running the meeting and who were demanding that he leave. His tone was described as loud, intemperate and intimidating. At this point a commotion had developed outside the meeting room. Urezzio and Wojda were there, the former telling franchisees that Carvel was very displeased with their actions, they were being ungrateful and disloyal and that 500 franchises had been lost and two lawyers disbarred for similar activities. In the meantime, a building security guard had been summoned to eject Roth, who was, even then, unwilling to leave. When he was told that he was not permitted to attend the meeting, he loudly declared that he had a right to be there. He demanded to know who had contracted for the use of the room and threatened to go to court to get that information. At this point, Roth claimed to be a "Federal attorney". Finally, Roth, Urezzio and Wojda were escorted by the security guard and one of the dealers off the premises. Our dissenting brother apparently concedes the propriety of Special Term's denial of the motion to dismiss the complaint for failure to state a cause of action. He would, however, grant summary judgment exculpating Roth as a matter of law for the reason that "[a]s general counsel to Carvel, the only action alleged by the plaintiff was the attorney's attempts to speak, uninvited, at a meeting of Carvel franchisees". Apart from such a benign view of Roth's activities, the record does not support a finding that he was "general counsel to Carvel", either in his own words or in the words of the affiant vice-president of Carvel who states that Roth was not an attorney for Carvel in any of the areas concerned in this suit. Roth did not argue at Special Term, nor does he contend here, that he should be exculpated as an attorney for Carvel. The plaintiff itself disclaims any allegation or intention that Roth be held liable for any acts as Carvel's attorney. It is Roth's contention that the mere fact that he is a director of Carvel is not a sufficient basis for antitrust liability and that a corporation cannot conspire with its directors so as to constitute a Donnelly Act violation. But the plaintiff does not complain of any acts taken by Roth in his capacity as a director and disclaims any such intention. Furthermore, injunctions and penalty actions under the Donnelly Act are authorized against directors of a corporation (see General Business Law, § 342, 342-a) and the complaint alleges prohibited activity between and among several independent persons and corporations. Concur — Sandler, Silverman and Lynch, JJ.