The Herald, Sharon, Pa.

Local News

March 5, 2014

Finding common ground ‘Paramount’ to judge

WHEATLAND — A judge on Monday asked the disputing sides claiming control of a Wheatland company to come to some sort of resolution that will keep the 80 employees of Paramount Games Inc. working as usual and avoid prolonged litigation.

Whether any common ground was found is unknown as the parties have not responded to requests for comment, and the docket on Tuesday was bereft of any written agreements, actions by the judge to various petitions, or notice of additional hearings.

By their statements in court Monday, it seems they are far apart and entrenched in their positions.

Paul J. Swartz, founder of Paramount Games Inc., 30 Mill St., and three other supposed directors of the company filed suit Feb. 24 claiming that 16 shareholders, led by Douglas S. Dohner of Annville, Pa., had illegally ousted Swartz as president and chief executive officer and set up a new board of directors that replaced Swartz with Dohner.

Neither side recognizes the other’s board.

Mercer County Common Pleas Court Judge Robert G. Yeatts issued an injunction based on the complaint that halts the defendants from any action to “assert control” over the company.

Daniel B. McLane of the law firm Eckert Seamans, Pittsburgh, who represent Dohner and Frank T. Taverrite of Lakeside, Mont., told Yeatts that Swartz’s claims should be heard by an arbiter, not a judge, and that the defendants had not been properly served with the initial complaint.

“There is a serious due process failure and a fundamental one as a matter of law,” McLane said.

Swartz, of Las Vegas, conveniently omitted the arbitration language from his complaint, McLane said.

“There’s no wiggle room here,” he said. “It is a mandatory provision.”

McLane asked Yeatts to vacate the injunction and noted Dohner had filed legal action in Delaware, arguing a Delaware court is a more appropriate forum because Paramount Games was incorporated in that state.

Yeatts asked McLane about the authority of an arbiter, particularly whether the arbiter would have the same power to issue an injunction as he has; whether arbitration could be expedited; and what would happen to the company if he vacates the injunction.

McLane responded that the arbiter would have the same authority, that arbitration could be expedited if both sides agree and that Swartz, as the Dohner defendants see it, remains a shareholder and board member.

“They are not without recourse,” he said of Swartz and the other plaintiffs.

Richard W. Epstein, who represents the Swartz plaintiffs, said not all of the plaintiff claims are subject to arbitration, particularly the claim that the Dohner-led board is illegal; that seeking a court injunction is always proper “to prevent irreparable harm”; and that arbitration could not be expedited.

As to whether Yeatts should hear the case at all, Epstein said, “This is where Paramount Games is. This is where it has 80 employees. This court clearly has jurisdiction.”

Epstein also defended the service of the defendants, saying they all were sent copies of the complaint by overnight courier, except for Taverrite and one other defendant who live in such remote areas of Montana that the courier could not deliver overnight.

He added that he attempted to serve Dohner and Taverrite at Eckert Seamans, but the law firm refused to accept the packages.

Eckert Seamans has been appointed corporate counsel by the Dohner-led board.

And, even with such circumstances, McLane showed up, Epstein said.

Epstein also boiled down the action Swartz and the other plaintiffs are seeking to this: “All we’re saying is, have an annual meeting, let the board members decide who the board is.”

Yeatts asked Epstein if, by holding such a meeting, “Aren’t the defendants going to get what they want?”

“If they have the votes, they have their rights,” Epstein replied. “Just do it right.”

Presumably, a majority of the shareholders support Swartz’s ouster and Dohner’s appointment.

Yeatts also asked if there wasn’t common ground they could reach to resolve the differences, which likely would result in more court filings and action and appeals.

The judge said he would hate to see Paramount’s employees jeopardized by the dispute.

McLane answered that there is no circumstance under which Swartz could remain as president and CEO.

“Mr. Swartz is the president and CEO of this company,” Epstein responded. “You can’t reward illegal action.”

The parties stayed at the courthouse for much, if not all, of the rest of the day to continue discussions.

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