M.F. VS. JONAH (L-5473-12, HUDSON COUNTY AND STATEWIDE)
A-1076-19
| N.J. Super. Ct. App. Div. | Jul 6, 2021Background
- Plaintiffs sued JONAH, Arthur Goldberg, and others under the New Jersey Consumer Fraud Act alleging deceptive promotion and referrals for conversion therapy; a jury found JONAH and Goldberg liable.
- Parties entered a confidential settlement and consented to an Injunction Order (dec. 18, 2015) that dissolved JONAH and permanently enjoined defendants from engaging in or referring for conversion therapy or promoting conversion-therapy commerce in or directed at New Jersey.
- The Settlement Agreement waived defendants’ right to appeal the verdict, reduced plaintiffs’ fee award with a contractual provision that reserved "Breach Damages" if defendants breached, and gave defendants 30 days to cure any breach.
- Plaintiffs moved under Rule 1:10-3 to enforce the Injunction, alleging defendants formed JIFGA as a successor to JONAH, operated a crowdfunding site promoting conversion-therapy projects (with JIFGA retaining fees), and continued making referrals and receiving referral fees.
- The trial court found willful, uncured breaches: JIFGA was a continuation of JONAH; JIFGA’s crowdfunding promoted conversion-therapy commerce; and Goldberg and Berk continued referrals. The court ordered JIFGA dissolved and enjoined, awarded the contractual Breach Damages and disgorgement, and barred Goldberg and Berk from serving as officers/directors of New Jersey tax-exempt entities.
- Defendants appealed the June 10, 2019 enforcement order; the Appellate Division affirmed in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants breached the Injunction/Settlement by operating JIFGA, crowdfunding, and making referrals | JIFGA is a successor to JONAH; crowdfunding promoted conversion-therapy commerce; emails show continued referrals from NJ | Deny successor status, contend referrals were ambiguous or out-of-state, crowdfunding was third-party fundraising | Court: substantial record supports successor finding, crowdfunding retained fees and marketed conversion-therapy projects, and referrals originated from NJ; breaches proved |
| Whether refunding some referral fees cured breaches | Refunds were incomplete and did not cure continued promotional and referral conduct | Refunds eliminated the financial injury and cured breaches | Court: refunds were partial; formation of JIFGA and ongoing referrals meant breaches were uncured |
| Whether the trial court could award the contractual Breach Damages and attorneys’ fees | Plaintiffs entitled to agreed Breach Damages and fees per Settlement intertwined with Injunction | Damages excessive; improper to enforce large fee clause via Rule 1:10-3 | Court: damages clause enforceable (Settlement incorporated into court order); willful violations justified Breach Damages and fee award |
| Whether court erred by barring Goldberg/Berk from incorporating or serving as officers/directors of NJ tax-exempt entities | Restriction was necessary to prevent further circumvention and enforce the injunction | Overbroad, beyond conversion-therapy nexus; infringes associational/other constitutional rights | Court: restriction tailored as remedy to prevent repeat violations; within equitable authority under CF Act and Rule 1:10-3; constitutional claims not preserved for appeal |
Key Cases Cited
- In re Adoption of N.J.A.C. 5:96 & 5:97, 221 N.J. 1 (2015) (Rule 1:10-3 enforcement principles and courts’ remedial discretion)
- Abbott ex rel. Abbott v. Burke, 206 N.J. 332 (2011) (scope of relief in motions in aid of litigants’ rights)
- Ramirez v. Amsted Indus., Inc., 86 N.J. 332 (1981) (factors for successor-in-interest/continuation)
- Woodrick v. Jack J. Burke Real Est., Inc., 306 N.J. Super. 61 (App. Div. 1997) (continuation inquiry—no single factor required)
- Marshak v. Treadwell, 595 F.3d 478 (3d Cir. 2009) (consideration whether new entity holds itself out as successor)
- Real v. Radir Wheels, Inc., 198 N.J. 511 (2009) (CF Act reach and nexus with New Jersey)
- State v. Gelman, 195 N.J. 475 (2008) (last-antecedent rule of statutory construction)
- Wasserman's Inc. v. Twp. of Middletown, 137 N.J. 238 (1994) (stipulated damages clauses presumptively enforceable)
- Hynes v. Clarke, 297 N.J. Super. 44 (App. Div. 1997) (award of counsel fees where party willfully violates an order)