At a brief pre-motion hearing in Manhattan on Thursday, Judge John G. Koeltl threw cold water on Demos Parneros’ plan to seek a dismissal of Barnes & Noble’s countersuit against him, and gave Parneros until December 21 to decide whether or not to move ahead with the motion.
Though the judge stressed that Parneros was free to make such a move, he reiterated concerns first expressed at the parties’ initial court appearance on November 13 that the motion was a waste of time and effort.
Questioned by Koeltl, Parneros attorney Anne L. Clark conceded that any motion to dismiss the retailer’s counterclaim would have no impact on the discovery schedule in Parneros’ defamation and breach of contract suit, but told the judge that Parneros simply didn’t want the claims “hanging over his head.” Clark said Parneros is confident he will prevail in his suit, but said knocking out B&N’s counterclaim—which includes the prospect of the company clawing back more than $1 million in previous compensation—would “be meaningful.”
Koeltl responded that counterclaims are common in this kind of litigation, and stressed that if the counterclaim is without merit, either in the law or the facts, that would surely come out in the course of Parneros’ suit. Further, while he acknowledged that filing the motion may well be “a strategic decision” for Parneros, he warned that he would not rule on the motion quickly. Since the counterclaim has admittedly no bearing on discovery in Parneros's suit, he noted, “there is no urgency.”
In its October 30 counterclaim, B&N accused Parneros of sabotaging the sale of the company in the spring, and is seeking damages from Parneros for his “disloyal” conduct and alleged breach of his fiduciary duties. But in a letter filed just before Thanksgiving, attorneys for Parneros told the court B&N's counterclaim has no legal or factual merit, and that they would therefore move to dismiss the claims.
B&N lawyers were present, but did not argue in court on Thursday. In a letter filed with the court on November 27, however, B&N attorneys said their countersuit has merit, and that a motion to dismiss was ill-advised.
“The contemplated motion would be a waste of both the Court’s and the parties’ time and resources because the counterclaims, which assert that Plaintiff undermined a potential change of control transaction because of his desire to retain his position as the CEO of Barnes & Noble, are well pleaded and, as observed by the Court at the November 13, 2018 initial conference, turn on issues of fact that are not susceptible to resolution on a motion to dismiss,” the letter reads.
In addition, attorneys for Parneros told the court that they have asked B&N to pay Parneros’s legal bills in advance for defending the counterclaim, citing a “very broad” indemnification provision in Parneros’ employment contract. Koeltl said that claim could be included as part of the motion to dismiss should—or almost certainly, when—B&N declines to pay.
In its letter this week, B&N attorneys told the court that they are currently "reviewing" that request and have asked for "additional information related thereto.”