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HomeMy WebLinkAbout11-9222RITE AID HDQTRS. CORP, Plaintiff, V. CTA DIGITAL Defendant IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY- PENNSYLVANIA NO. 11-9222 CIVIL TERM CIVIL ACTION - LAW «: G C) , c a © AFFIDAVIT OF SERVICE PURSUANT TO PA. R.C.P. 405 COMMONWEALTH OF PENNSYLVANIA COUNTY OF DAUPHIN SS: THE UNDERSIGNED, Brian P. Downey, being duly sworn according to law, does depose and say as follows: 1. I am a competent adult and an attorney duly admitted to the Bar of the Supreme Court of the Commonwealth of Pennsylvania, having Attorney Identification Number 59891. 2. On December 14, 2011, I caused the Complaint to be served upon defendant CTA Digital by the mailing of a true and correct copy of the Complaint to the defendant's principal place of business by United States certified mail, return receipt requested, postage prepaid, addressed as follows: CTA Digital, 49 S. 2nd Street, Brooklyn, NY 11211. 3. I received the return receipt, which was delivered and accepted at CTA Digital, 49 S. 2nd Street, Brooklyn, NY 11211, on December 16, 2011, by or on behalf of the defendant, thereby completing service pursuant to Pa. R.C.P. 403. The original return receipt signed by or on behalf of the defendant is attached hereto as Exhibit "A". Respectfully submitted, downeyb@pepperlaw.com Date: December 19, 2011 Attorneys for Plaintiff Rite Aid Hdgtrs.Corp. SWORN TO AND SUBSCRIBED BEFORE ME THIS AO DA Y OF (?Q h QkZ 2011. N ary Publ q Th OF m#MVNO-A r?ofaa SW ti 1l* Pmt, ? Pubic -2- Harrisburg, PA 17108-1181 717.255.1155 717.238.0575 Fax RITE AID HDQTRS. CORP, V. CTA DIGITAL IN THE COURT OF COMMON PLEAS OF Plaintiff, CUMBERLAND COUNTY, PENNSYLVANIA NO. 11-9222 CIVIL TERM CIVIL ACTION - LAW Defendant EXHIBIT A s bkoftbow 4. Q, Mild & AW A 8wm%n am 4 M Rmma "algid b x A 0 AWt ¦ P** yaw twm Ad t oils an ft mvem 0 AMMON eo 9W m am mplum the oefd to you. B. Paodad by (P!lfrited ME" C. Dab of Ddvwy ¦ Atlf el p Utie aefd 10 the belt of the meNpiw% or dm the *aK If *e pafl *L 1. llrtiofa liddnsesd Qo: D. w dduoy atidwlu? awn 11 it YES, enlsr o\w 0 `des 0 No '9 1 3, 8hrtiloa lypa p? . _ __ - " 04kdNbd Mw 0 A 911 a e I (k Rrlr o for him Ama O komw *0 D c o.D. 4. ReeMlcbd Ddnxr? #BftFes 6Yrds 2. Af"Nu"W f 7009 { wrarftniiner?+9 2250 0000 3707 8055 PS Form 3811, Febm" ON Domesflo PA tum Heoelpt 102605a2-+4a40 CERTIFICATE OF SERVICE I hereby certify that on December 19, 2011, a copy of the foregoing document was served by United States mail, first class postage prepaid, addressed as follows: CTA Difital 49 S. 2" Street Brooklyn, NY 11 U Timothy J. Nieman, Esquire Attorney I.D. No. 66024 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 Telephone: (717) 233-5731 Facsimile: (717) 238-8623 TNeiman@Rhoads-Sinon.com Attorneys for Defendant 1 I?MAR _9 PM 12: C CUMSERL A tqp PENNSYLVAt li, `RITE AID HDQTRS. CORP., Plaintiff, vs. CTA DIGITAL, Defendant TO: Rite Aid Hdqtrs. Corp. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 11-9222 CIVIL TERM CIVIL ACTION - LAW NOTICE TO PLEAD You are hereby notified to file a written response to the enclosed New Matter and Counterclaim within twenty (20) days from service hereof or a default judgment may be entered against you. RHOADS & SINON LLP By: , Timothy ieman One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Attorneys for Defendant C T A Digital, Inc. DATED: March 9, 2012 Timothy J. Nieman, Esquire Attorney I.D. No. 66024 RHOADS & SINON LLP One South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 Telephone: (717) 233-5731 Facsimile: (717) 238-8623 TNeiman@Rhoads-Sinon.com Attorneys for Defendant RITE AID HDQTRS. CORP., Plaintiff, vs. CTA DIGITAL, Defendant. CIVIL ACTION - LAW ANSWER, NEW MATTER AND COUNTERCLAIM Defendant C T A Digital Inc. (sued herein as CTA Digital) ("Defendant"), by and through its undersigned counsel, as and for its Answer, New Matter and Counterclaim with regard to the Complaint, dated December 12, 2011 (the "Complaint"), of plaintiff Rite Aid Hdqtrs. Corp. ("Plaintiff'), respectfully: 1. Denies having knowledge or information sufficient to form a belief as to the truth of the allegations set forth in Paragraph 1 of the Complaint and denies the same. 2. Admits the allegations set forth in Paragraph 2 of the Complaint, but avers that its true legal name is "C T A Digital Inc." 3. Neither admits nor denies the allegations set forth in Paragraph 3 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. 4. Neither admits nor denies the allegations set forth in Paragraph 4 of the IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 11-9222 CIVIL TERM 841330.1 Complaint as they constitute statements and/or conclusions of law to which no response is required. 5. Neither admits nor denies the allegations set forth in Paragraph 5 of the Complaint as the "Guaranteed Sales Agreement" speaks for itself and to which Defendant defers for all terms and. conditions, and the purported validity, enforceability and legal effect, thereof. 6. Denies having knowledge or information sufficient to form a belief as to the truth of the allegations set forth in Paragraph 6 of the Complaint. 7. Admits the allegations set forth in Paragraph 7 of the Complaint. 8. Neither admits nor denies the allegations set forth in Paragraph 8 of the Complaint as the "Guaranteed Sales Agreement" speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 9. Neither admits nor denies the allegations set forth in Paragraph 9 of the Complaint as the Guaranteed Sales Agreement speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 10. Neither admits nor denies the allegations set forth in Paragraph 10 of the Complaint as the Guaranteed Sales Agreement speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 11. Denies having knowledge or information sufficient to form a belief as to the truth of the allegations set forth in Paragraph 11 of the Complaint, but asserts that any "determination" or exercise of "discretion" by Plaintiff with regard to Defendant's products was not commercially reasonable. To the extent that a response is deemed appropriate, the allegations of this Paragraph are denied. To the contrary, the products referenced in this Paragraph performed as required. 2 12. Neither admits nor denies the allegations set forth in Paragraph 12 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent that a response is deemed appropriate, the allegations of this Paragraph are denied. 13. Admits the allegations set forth in Paragraph 13 of the Complaint, but only to the extent that Plaintiff and Defendant were parties to agreements, and/or amendments or modifications of agreements, other than the Guaranteed Sales Agreement. Defendant defers to the terms and provisions of said agreements, and the purported validity, enforceability and legal effect thereof, which speak for themselves. 14. Neither admits nor denies the allegations set forth in Paragraph 14 of the Complaint as the "Rite Aid Returns Agreement" speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 15. Admits the allegations set forth in Paragraph 15 of the Complaint, but asserts that Plaintiff and Defendant may have executed additional agreements, and/or amendments or modifications of agreements, concerning Plaintiff's return of Defendant's products other than the Rite Aid Returns Agreement attached to the Complaint as Exhibit B. 16. Neither admits nor denies the allegations set forth in Paragraph 16 of the Complaint as the Rite Aid Returns Agreement speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 17. Neither admits nor denies the allegations set forth in Paragraph 17 of the Complaint as the Rite Aid Returns Agreement speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 18. Neither admits nor denies the allegations set forth in Paragraph 18 of the 3 Complaint as the Rite Aid Returns Agreement speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 19. Neither admits nor denies the allegations set forth in Paragraph 19 of the Complaint as the Rite Aid Vendor Supply Chain Guide speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 20. Admits the allegations set forth in Paragraph 20 of the Complaint, but only to the extent that Defendant incurred fees of the type described during the parties' business relationship. The remaining allegations of this Paragraph are denied. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 21. Denies the allegations set forth in Paragraph 21 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 22. Denies having knowledge or information sufficient to form a belief as to the truth of the allegations set forth in Paragraph 22 of the Complaint. To the extent that a response is deemed appropriate, these allegations are denied. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 23. Denies the allegations set forth in Paragraph 23 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the 4 Plaintiff. 24. Admits the allegations set forth in Paragraph 24 of the Complaint, but only to the extent that representatives of Plaintiff and Defendant discussed a resolution of the entire account between Plaintiff and Defendant including, without limitation, amounts purportedly owed by Defendant to Plaintiff, amounts purportedly owed by Plaintiff to Defendant and the return of Defendant's unsold products by Plaintiff. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 25. Neither admits nor denies the allegations set forth in Paragraph 25 of the Complaint as the communication referenced therein speaks for itself and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. ANSWERING COUNT I OF THE COMPLAINT 26. In response to the allegations set forth in Paragraph 26 of the Complaint, Defendant repeats, reiterates and realleges its responses to the allegations set forth in Paragraphs 1 through 25 of the Complaint as if set forth at length herein. 27. Neither admits nor denies the allegations set forth in Paragraph 27 of the Complaint as the agreements referenced therein speak for themselves and to which Defendant defers for all terms and conditions, and the purported validity, enforceability and legal effect, thereof. 28. Neither admits nor denies the allegations set forth in Paragraph 28 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 28 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and 5 Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 29. Neither admits nor denies the allegations set forth in Paragraph 29 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 29 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 30. Neither admits nor denies the allegations set forth in Paragraph 30 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 30 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), Plaintiff failed to perform all conditions precedent. 31. Neither admits nor denies the allegations set forth in Paragraph 31 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 31 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 32. Neither admits nor denies the allegations set forth in Paragraph 32 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. 6 To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 32 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. WHEREFORE, Defendant demands the entry of judgment dismissing the Complaint in its entirety and granting Defendant such other and further relief as this Court may deem just and proper. ANSWERING COUNT II OF THE COMPLAINT 33. In response to the allegations set forth in Paragraph 33 of the Complaint, Defendant repeats, reiterates and realleges its responses to the allegations set forth in Paragraphs 1 through 32 of the Complaint as if set forth at length herein. 34. Neither admits nor denies the allegations set forth in Paragraph 34 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 34 of the Complaint. 35. Denies having knowledge or information sufficient to form a belief as to the truth of the allegations set forth in Paragraph 35 of the Complaint. Further, neither admits nor denies the allegations set forth in Paragraph 35 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 35 of the Complaint. 36. Neither admits nor denies the allegations set forth in Paragraph 36 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. 7 To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 36 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 37. Neither admits nor denies the allegations set forth in Paragraph 37 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 37 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 38. Neither admits nor denies the allegations set forth in Paragraph 38 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 38 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 39. Neither admits nor denies the allegations set forth in Paragraph 39 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 39 of the Complaint. By way of further answer, and as outlined more fully in the New Matter and Counterclaim below (which are incorporated herein by reference), the Defendant does not owe the specific amounts alleged by the Plaintiff. 8 40. Neither admits nor denies the allegations set forth in Paragraph 40 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 40 of the Complaint. 41. Neither admits nor denies the allegations set forth in Paragraph 41 of the Complaint as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 41 of the Complaint. WHEREFORE, Defendant demands the entry of judgment dismissing the Complaint in its entirety and granting Defendant such other and further relief as this Court may deem just and proper. NEW MATTER 42. Defendant repeats, reiterates and realleges its responses to the allegations set forth in Paragraphs 1 through 41 of the Complaint as if set forth herein. 43. The Complaint fails to set forth a claim or cause of action upon which relief may be granted against Defendant. 44. Any amount allegedly owed by Defendant to Plaintiff was and is subject to a bona fide dispute. 45. Plaintiff's accounting of its transactions with Defendant as set forth in the Complaint is false and/or misstated in that its fails to take into consideration all transactions, agreements, payments, returns, credits, disputes, waivers and the like between and among the parties. 46. Plaintiff's accounting of its transactions with Defendant as set forth in the 9 Complaint is false and/or misstated in that Plaintiff seeks to recoup and/or offset amounts on account of Defendant's products which were allegedly returned by Plaintiff, but which were never actually received by Defendant. 47. Plaintiff's accounting of its transactions with Defendant as set forth in the Complaint is false and/or misstated in that Plaintiff seeks to recoup and/or offset amounts on account of Defendant's products which were returned by Plaintiff in a commercially unreasonable manner, entirely inconsistent with the parties' prior course of conduct, and were received by Defendant in damaged and/or unsalable condition. 48. Plaintiff's accounting of its transactions with Defendant as set forth in the Complaint is false and/or misstated in that Plaintiff fails to properly credit Defendant on account of products sold to and retained by Plaintiff both prior to and after Defendant's purported breach of contract. 49. Upon information and belief, certain, if not all, of the alleged "agreements" referenced in and attached as exhibits to the Complaint were amended, modified and/or terminated by the parties subsequent to their initial execution and, thus, Plaintiff cannot maintain its claims for relief against Defendant as asserted. 50. The material terms of the alleged "agreements" referenced in and attached as exhibits to the Complaint are vague and ambiguous such that there was no meeting of the minds between Defendant and Plaintiff and, thus said agreements are unenforceable. 51. Plaintiff has failed to mitigate its damages, if any exist. 52. By virtue of the acts of Plaintiff and/or the persons and/or entities acting on behalf of Plaintiff, Defendant has been damaged in an amount equal to or greater than the amount of 10 damages, if any, to which Plaintiff may be entitled. 53. Defendant was excused from any performance due from it to Plaintiff under any alleged agreement. 54. The purported causes of action asserted in the Complaint are barred by reason of Plaintiff's prior material breach of the alleged agreements. 55. Plaintiff and Defendant continued to transact business together subsequent to Defendant's purported breach of the agreements referenced in the Complaint constituting a novation concerning said agreements and without any reservation of rights or remedies by Plaintiff under the agreements purportedly breached by Defendant. 56. Plaintiff is barred in whole or in part from prosecuting the purported causes of action set forth in the Complaint because of a failure of Plaintiff, and/or persons and/or entities acting on its behalf, to perform all or any conditions, whether precedent, concurrent and/or subsequent, covenants, and/or promises on their part to be performed as between the parties herein. 57. Plaintiff's claims against Defendant must be diminished by Plaintiff's culpable conduct and contributory negligence. 58. Negligent and/or intentional misrepresentations were made by Plaintiff and/or its representatives to Defendant such that Defendant was induced to enter into the alleged agreements with Plaintiff, and/or was induced to continue performance under the alleged agreements with Plaintiff, which Defendant would not have done absent such misrepresentations. 59. Plaintiff cannot recover any of the amounts sought by way of its complaint because of an accord and satisfaction between the parties. 60. Plaintiff is barred in whole or in part from prosecuting the purported causes of 11 action set forth in the Complaint by the doctrine of estoppel. 61. Plaintiff is barred in whole or in part from prosecuting the purported causes of action set forth in the Complaint by the doctrine of laches. 62. Plaintiff is barred from recovering on the claims set forth in the Complaint on the grounds of mistake. 63. Plaintiff is barred in whole or in part from prosecuting the purported causes of action set forth in the Complaint by the doctrine of waiver. 64. Plaintiff is barred in whole or in part from prosecuting the purported causes of action set forth in the Complaint by the doctrine of unclean hands. WHEREFORE, Defendant demands the entry of judgment dismissing the Complaint in its entirety and granting Defendant such other and further relief as this Court may deem just and proper. COUNTERCLAIM FIRST COUNTERCLAIM (Breach of Contract - Unpaid Invoices) 65. Defendant repeats, reiterates and realleges its responses to the allegations set forth in Paragraphs 1 through 64 above as if set forth herein. 66. Between November, 2011 and February, 2012, and at the specific instance and request of Plaintiff, Defendant sold and delivered certain goods, to wit, peripherals for game consoles and hand-held devices, to Plaintiff having an agreed price and reasonable value of $153,395.00. 67. Each and every delivery of goods made by Defendant to Plaintiff was accepted 12 and retained by Plaintiff without any protest or objection thereto. 68. Simultaneously with each and every delivery of goods by Defendant to Plaintiff, Defendant issued a corresponding invoice to Plaintiff for payment, the terms of which were accepted by Plaintiff without any protest or objection thereto. 69. Each of Defendant's invoices to Plaintiff was payable by Plaintiff, in full, on "Net 30" day terms. 70. Plaintiff has not made any payment to Defendant against the amounts owed in connection with the goods delivered by Defendant to Plaintiff. 71. Plaintiff has not credited Defendant's account for the amounts owed in connection with the goods delivered by Defendant to Plaintiff. 72. In addition to the foregoing, Plaintiff continues to place product orders with Defendant pursuant to which Defendant continues to sell and deliver goods to Plaintiff on account of which payment is or will in the future become due from Plaintiff to Defendant. 73. As a result of the foregoing, there is an unpaid principal balance currently due and owing from Plaintiff to Defendant in an amount totaling not less than $153,395.00 as of the date hereof. 74. By failing to pay to Defendant and/or to credit Defendant's account with Plaintiff the amounts owed in full, Plaintiff has breached the terms of its agreements with Defendant which breach has caused harm to Defendant. 75. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, but in any case not less than $153,395.00, together with interest therein at the statutory rate, for which Defendant demands judgment. 13 WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. SECOND COUNTERCLAIM (Unjust Enrichment - Goods Delivered Under Unpaid Invoices) 76. Defendant repeats, reiterates and realleages the allegations set forth in Paragraphs 1 through 75 above as if set forth at length herein. 77. Plaintiff accepted the goods delivered to it by Defendant and, upon information and belief, resold the same to its customers for which it received or expects to receive payment or otherwise retained the benefits of said goods. 78. As a result, Plaintiff derived a substantial benefit from the goods delivered to it by Defendant for which Defendant has not been paid and/or its account with Plaintiff properly credited. 79. As a result, Plaintiff has been unjustly enriched in the amount of not less than $153,395.00 at the expense of Defendant. 80. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, but in any case not less than $153,395.00, together with interest therein at the statutory rate, for which Defendant demands judgment. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. 14 THIRD COUNTERCLAIM (Breach of Contract - Unreturned Goods) 81. Defendant repeats, reiterates and realleages the allegations set forth in Paragraphs 1 through 80 above as if set forth at length herein. 82. By way of the Complaint, Plaintiff asserts that, by way of sixteen (16) "Recalls", it returned to Defendant products having invoice prices totaling $476,148.65. See Exhibit D to Complaint. 83. The invoice prices of the products actually received by Defendant from Plaintiff pursuant to the alleged "Recalls" was less than the amount asserted by Plaintiff by not less than $49,578.85. 84. Defendant's review and reconciliation of the returned products actually received by Defendant from Plaintiff is ongoing and, thus, the invoice amount for products not actually received by Defendant pursuant to the alleged "Recalls" is uncertain at this time. 85. Plaintiff has not made any payment to Defendant against the amounts owed in connection with the products that were allegedly returned by Plaintiff, but were not actually received by Defendant. 86. Plaintiff has not credited Defendant's account for the amounts owed in connection with the products that were allegedly returned by Plaintiff, but were not actually received by Defendant. 87. As a result of the foregoing, there is an unpaid principal balance currently due and owing from Plaintiff to Defendant in an amount totaling not less than $49,578.85 as of the date hereof 15 88. By failing to pay to Defendant and/or to credit Defendant's account with Plaintiff the amounts owed in full, Plaintiff has breached the terms of its agreements with Defendant which breach has caused harm to Defendant. 89. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, but in any case not less than $49,578.85, together with interest therein at the statutory rate, for which Defendant demands judgment. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. FOURTH COUNTERCLAIM (Unjust Enrichment - Unreturned Goods) 90. Defendant repeats, reiterates and realleages the allegations set forth in Paragraphs 1 through 89 above as if set forth at length herein. 91. Upon information and belief, Plaintiff failed to return goods to Defendant having invoice prices totaling not less than $49,578.85. 92. Upon information and belief, Plaintiff resold said goods to its customers for which it received or expects to receive payment or otherwise retained the benefits of said goods. 93. As a result, Plaintiff derived a substantial benefit from the goods delivered to it by Defendant for which Defendant has not been paid and/or its account with Plaintiff properly credited. 94. As a result, Plaintiff has been unjustly enriched in the amount of not less than $49,578.85 at the expense of Defendant. 16 95. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, but in any case not less than $49,578.85, together with interest therein at the statutory rate, for which Defendant demands judgment. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. FIFTH COUNTERCLAIM (Breach of Contract - Damaged/Unsaleable Returned Goods) 96. Defendant repeats, reiterates and realleages the allegations set forth in Paragraphs 1 through 95 of its Counterclaims as if set forth at length herein. 97. By way of the Complaint, Plaintiff asserts that, by way of sixteen (16) "Recalls", it returned to Defendant products having invoice prices totaling $476,148.65. See Exhibit D to Complaint. 98. A substantial amount of the products actually received by Defendant from Plaintiff pursuant to the alleged "Recalls" were damaged and/or were in unsalable condition. 99. The manner in which Plaintiff processed and shipped the products actually received by Defendant from Plaintiff pursuant to the alleged "Recalls" was inconsistent with the terms of the agreements between Plaintiff and Defendant and was further inconsistent with the prior course of dealings between Plaintiff and Defendant. 100. Defendant's review and reconciliation of the condition of the returned products actually received by Defendant from Plaintiff is ongoing and, thus, the invoice amount for products received by Defendant pursuant to the alleged "Recalls" in damaged and/or unsalable 17 condition is uncertain at this time. 101. Plaintiff has not made any payment to Defendant against the amounts owed in connection with the products that were returned by Plaintiff in damaged and/or unsalable condition. 102. Plaintiff has not credited Defendant's account for the amounts owed in connection with the products that were returned by Plaintiff in damaged and/or unsalable condition. 103. By failing to pay to Defendant and/or to credit Defendant's account with Plaintiff the amounts owed in full, Plaintiff has breached the terms of its agreements with Defendant which breach has caused harm to Defendant. 104. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, together with interest therein at the statutory rate, for which Defendant demands judgment. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. SIXTH COUNTERCLAIM (Unjust Enrichment - Damaged/Unsaleable Returned Goods) 105. Defendant repeats, reiterates and realleages the allegations set forth in Paragraphs 1 through 104 above as if set forth at length herein. 106. Plaintiff has sought to offset the full invoice amount of the goods returned to Defendant in damaged and/or unsaleable condition against the amounts legitimately owed by Plaintiff to Defendant. 107. If permitted such an offset, Plaintiff would be unjustly enriched at the expense of Defendant. 18 108. Consequently, Plaintiff is liable to Defendant in an amount to be determined at trial, together with interest therein at the statutory rate, for which Defendant demands judgment. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. Respectfully submitted, RHOADS & SINON LLP By: Timothy . Nieman One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Eric C. Zabicki, Esquire Pick & Zabicki LLP 369 Lexington Avenue, 12th Floor New York, New York 10017 Telephone: (212) 695-6000 Attorneys for Defendant C T A Digital, Inc. DATED: March 9, 2012 19 VERIFICATION LIPA MARKOWITZ deposes and says, subject to the penalties of 18 11a.C.S. §4904 relating to unsworn falsification to authorities, that he is the Secretary and Treasurer of C T A Digital Inc., that he makes this verification by its authority and that the facts set forth in the foregoing document are true and correct. to the best of his knowledge, information and belief. LIPA MARKOWITZ CERTIFICATE OF SERVICE I hereby certify that on this 9th day of March, 2012, a true and correct copy of the foregoing document was served by means of United States mail, first class, postage prepaid, upon the following: Brian P. Downey, Esq. Tucker P. Hull, Esq. Pepper Hamilton LLP 100 Market Street, Suite 200 P.O. Box 1181 Harrisburg, PA 17108-1181 RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, NO. 11-9222 CIVIL TERM VS. CTA DIGITAL CIVIL ACTION - LAW -.dam i -73 Defendant. , i.(7 ro ry t_" NOTICE TO DEFEND s You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. Cumberland County Bar Association 32 South Bedford Street Carlisle, PA 17013 Telephone: (717) 249-3166 RITE AID HDQTRS. CORP, vs. CTA DIGITAL Plaintiff, Defendant. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 11-9222 CIVIL TERM CIVIL ACTION - LAW PLAINTIFF RITE AID HDQTRS. CORP.'S ANSWER TO NEW MATTER AND COUNTERCLAIM OF CTA DIGITAL Plaintiff Rite Aid HDQTRS. Corp. ("Rite Aid"), by its undersigned attorneys, hereby answers the New Matter and Counterclaim of CTA Digital ("CTA") as follows: NEW MATTER 42. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint as if fully set forth herein. 43. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 44. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 45. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid's accounting is not false and/or misstated. Rite Aid has not failed to take into consideration all transactions, agreements, payments, returns, credits, disputes, waivers and the like between and among the parties. 46. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid's accounting is not false and/or misstated. Rite Aid is unaware of any product that was returned to CTA, but not actually received. 47. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 48. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 49. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 50. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 51. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 52. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. -2- 53. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 54. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 55. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 56. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 57. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 58. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 59. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. -3- 60. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 61. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 62. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 63. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 64. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. WHEREFORE, Rite Aid requests judgment in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. COUNTERCLAIM FIRST COUNTERCLAIM 65. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-64, above, as if fully set forth herein. 66. Admitted in part, denied in part, and denied as stated in part. Rite Aid admits that, at certain times, CTA delivered certain goods to Rite Aid for sale in Rite Aid's -4- stores. These goods were delivered subject to agreements between the parties. Denies that Rite Aid owes any money to CTA. To the contrary, as set forth in more detail in Rite Aid's complaint, CTA currently owes money to Rite Aid. Still by way of further answer, to the extent that CTA is asserting that Rite Aid was not permitted to return product to CTA, such allegation is denied as a statement of fact and denied as an inaccurate conclusion of law. 67. Denied. Rite Aid notified CTA that its product performance was unacceptable. Rite Aid also notified CTA that it was exercising its right, pursuant to the Guaranteed Sales Agreement executed by CTA, to return all product that was unsaleable. Rite Aid returned the product to CTA pursuant to the Returns Agreement, which had been executed by CTA. As a result of the returns of unsaleable goods, CTA owes Rite Aid $338,438.80 in fees related to the return of unsold goods. 68. Denies. Pursuant to an agreement between Rite Aid and CTA, CTA submitted all invoices to Rite Aid electronically. Those electronically submitted invoices did not any additional terms. By way of further answer, Rite Aid denies CTA's suggestion that it could unilaterally alter the terms of its agreement with Rite Aid. Still by way of further answer, the terms upon which CTA now purportedly attempts to rely are contrary to the terms of the agreements between the parties. 69. Denied. By way of further answer, Rite Aid incorporates its response to Paragraph 68 above as fully as though the same were set forth at length herein. 70. Denied. Rite Aid denies that it is required to make any payment to CTA. 71. Denied. 72. Admitted in part and denied in part. Rite Aid admits that CTA continues to provide product for sale in Rite Aid stores. Rite Aid denies any suggestion that it currently -5- owes money to CTA for these goods. Rite Aid denies any suggestion that the goods being delivered by CTA to Rite Aid are being delivered on terms any different from those in the agreements between the parties. With respect to CTA's allegation that there may come a point at some time in the future at which Rite Aid might owe money to CTA, Rite Aid is without knowledge or information sufficient to predict such a future event and, therefore, such allegations are deemed to be denied. 73. Denied. Rite Aid denies that there any unpaid principal balance currently due and owing to CTA. To the contrary, CTA currently owes Rite Aid more than $338,438.80 plus continuing interest. 74. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 75. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. SECOND COUNTERCLAIM 76. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-75, above, as if fully set forth herein. 77. Denied as stated. Rite Aid admits that it has sold to Rite Aid customers some of the goods delivered by CTA. CTA's product performance, however, has been -6- determined by Rite Aid to be inadequate pursuant to the Guaranteed Sales Agreement executed by CTA. Rite Aid has, therefore, invoked its right to return unsold product consistent with the terms agreed to by CTA in the Returns Agreement. 78. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. Still by way of further answer, Rite Aid has incurred costs, expenses, and losses and CTA currently owes it in excess of $338,438.80 plus continuing interest. 79. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid has accepted goods from CTA and some of those goods have been sold to Rite Aid customers. The majority of the goods received from CTA, however, have not sold. As a result of the underperformance of CTA's goods, Rite Aid has asserted its right to return the unsold product to CTA pursuant to the terms of the Returns Agreement. CTA has refused to accept the returned goods, in violation of the Returns Agreement. As such, CTA owes Rite Aid at least $338, 438.80 related to the return of goods pursuant to the agreed upon terms of the Returns Agreement. 80. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. -7- THIRD COUNTERCLAIM 81. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-80, above, as if fully set forth herein. 82. The Complaint is a writing that speaks for itself, any characterization inconsistent therewith are hereby denied. 83. The invoices referenced in this Paragraph are written documents that speak for themselves. Any characterization inconsistent therewith is hereby denied. By way of further response, it is denied that CTA received from Rite Aid products having invoice prices totaling less than $476,148.65. 84. After reasonable investigation, Rite Aid is without knowledge sufficient to form a belief as to the truth of the averments of this Paragraph and the same are therefore denied. 85. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid does not owe CTA any payment. To the contrary, CTA owes Rite Aid at least $338, 438.80 plus continuing interest related to the return of goods pursuant to the agreed upon terms of the Returns Agreement. 86. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid denies that it owes CTA any credit in connection with any products. By way of further response, Rite Aid is unaware of any products "returned" to CTA, but "not actually received" by CTA, and, therefore, denies that any such products exist. 87. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid does not owe CTA any unpaid principal balance. -8- To the contrary, CTA owes Rite Aid at least $338,438.80 related to the return of goods pursuant to the agreed upon terms of the Returns Agreement. 88. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. 89. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. FOURTH COUNTERCLAIM 90. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-89, above, as if fully set forth herein. 91. Denied. On information and belief, Rite Aid has returned all product to CTA that is accounted for in Rite Aid's accounting statements. 92. Admits in part and denies in part. Rite Aid admits that it has sold some of CTA's product to Rite Aid customers. Rite Aid denies that CTA is entitled to any payment. To the contrary. CTA currently owes Rite Aid more than $338,438.80 plus continuing interest. 93. Denied. By way of further answer, the averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. -9- 94. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. To the contrary, CTA currently owes Rite Aid more than $338,438.80 plus continuing interest. 95. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. To the contrary, CTA currently owes Rite Aid more than $338,438.80 plus continuing interest. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. FIFTH COUNTERCLAIM 96. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-95, above, as if fully set forth herein. 97. The Complaint is a writing that speaks for itself and any characterization inconsistent therewith is hereby denied. 98. Denied. To the contrary, all product returned to CTA was returned in a manner consistent with the parties' agreements. By way of further answer, Rite Aid specifically denies any suggestion that it was required to return product to CTA in any particular condition. 99. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid returned all goods to CTA consistent with the terms agreed upon in the Returns Agreement. Still by way of further answer, Rite Aid -10- incorporates. by reference its response to Paragraph 98 above as fully as though the same were set forth at length herein. 100. After reasonable investigation, Rite Aid is without knowledge sufficient to form a belief as to the truth of the averments of this Paragraph and the same are therefore denied. Still by way of further answer, Rite Aid incorporates by reference its response to Paragraph 98 above as fully as though the same were set forth at length herein. 101. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid does not owe CTA any payment. To the contrary, CTA owes Rite Aid at least $338,438.80 related to the return of goods pursuant to the agreed upon terms of the Returns Agreement. Still by way of further answer, Rite Aid incorporates by reference its response to Paragraph 98 above as fully as though the same were set forth at length herein. 102. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, Rite Aid does not owe CTA any credit. To the contrary, CTA owes Rite Aid at least $338,438.80 related to the return of goods pursuant to the agreed upon terms of the Returns Agreement. Still by way of further answer, Rite Aid incorporates by reference its response to Paragraph 98 above as fully as though the same were set forth at length herein. 103. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are -11- hereby denied. Still by way of further answer, Rite Aid incorporates by reference its response to Paragraph 98 above as fully as though the same were set forth at length herein. 104. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, CTA currently owes Rite Aid in excess of $338,438.80 plus continuing interest. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. SIXTH COUNTERCLAIM 105. Rite Aid incorporates by reference Paragraphs 1-41 of its Complaint and Paragraphs 42-104, above, as if fully set forth herein. 106. The averments in this Paragraph attempt to characterize the allegations of Rite Aid's Complaint, which is a written document that speaks for itself. Any characterizations inconsistent therewith are hereby denied. CTA's refusal to pay Rite Aid money owed to Rite Aid constitutes a breach of the agreements between the parties. By way of further response, CTA has a negative balance with Rite Aid of at least $338,438.80 relating to the return of product pursuant to the Returns Agreement. Until this negative balance is rectified, CTA is not entitled to any payments from Rite Aid. 107. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, CTA has a negative balance with Rite Aid of at least $338,438.80 relating to the return of product pursuant to the Returns Agreement. It would be -12- unjust for CTA to withhold this payment, which is legitimately owed to Rite Aid. By way of further response, CTA currently owes Rite Aid in excess of $338,438.80 plus continuing interest. 108. Denied. The averments in this Paragraph constitute conclusions of law to which no response is required. To the extent a response is deemed necessary, the averments are hereby denied. By way of further response, CTA currently owes Rite Aid in excess of $338,438.80 plus continuing interest. WHEREFORE, Rite Aid requests judgment in its favor and against CTA in an amount in excess of $338,438.80, an order compelling CTA to accept the return of its unsold product at CTA's costs, plus interest, costs and all other amounts deemed appropriate by the Court. NEW MATTER Rite Aid hereby alleges the following affirmative defenses in its New Matter,. By asserting such defenses, Rite Aid assumes no burden not already accorded to it under the law. 1. CTA's claims are barred in whole or in part because they fail to state a claim upon which relief can be granted. 2. CTA's claims are barred in whole or in part for lack of consideration. CTA's claims are barred in whole or part by the equitable doctrines of waiver, laches, estoppel, and/or unclean hands. 4. CTA's claims are barred in whole or in part because it has not suffered any compensable damages. 5. CTA's claims are not well grounded in fact and not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. -13- 6. CTA's claims are barred because of its failure or inability to perform under the terms of the relevant contract between the parties. 7. CTA's claims are barred in whole or in part for failure to mitigate damages. 8. CTA's claims are barred in whole or in part for its failure to act in good faith. 9. CTA's claims are barred in whole or in part because of its own material breaches of the agreements with Rite Aid. 10. CTA's claims are barred in whole or in part by the terms of the Guaranteed Sales Agreement and/or Returns Agreement. 11. Rite Aid hereby gives notice that it intends to rely upon such other defenses as may become available or may appear during discovery in this case or otherwise, and Rite Aid hereby reserves the right to amend this Answer to assert any and all such defenses. -14- WHEREFORE, Rite Aid requests judgment in its favor and against CTA and: (a) Dismissal of the Counterclaim with prejudice; (b) An award of fees and costs to Rite Aid; and, (c) Such other relief as the Court deems just and proper. Dated: April 6, 2012 Harrisburg, PA 17108-1181 Phone: (717) 255-1155 Fax: (717) 238-0575 Email: downeyb@pepperlaw.com hullt@pepperlaw.com Attorney for plaintiff Rite Aid Hdqtrs. Corp. -15- P.O. Box 1181 VERIFICATION I, Paul Pisauro, hereby state that I am authorized to make this verification on behalf of Rite Aid Hdqtrs. Corp. I verify that the foregoing document was prepared with the assistance and advice of counsel, and in reliance upon counsel's advice; that the document, subject to inadvertent or undiscovered errors, is based upon and therefore limited by the records and information still in existence, presently recollected and thus far discovered in preparation of this document; and that subject to the limitations set forth herein, the statements contained in this document are true and correct to the best of his knowledge, information and belief. The language of the foregoing document is that of counsel. It is understood that the statements herein are made subject to the penalties of 1.8 Pa. C.S.A. § 4904 relating to unsworn falsification to authorities. Dated: -4 ? S? Q, ?- Name: Paul Pisauro CERTIFICATE OF SERVICE I, Brian P. Downey, hereby certify that on April 6, 2012 a true and correct copy of the foregoing document was served via First Class, U.S. Mail, postage prepaid, upon the following: Timothy J. Nieman, Esquire RHOADS & SINON, LLP P. O. Box 1146 Harrisburg, PA 17108-1146 Eric C. Zabicki, Esquire PICK & ZABICKI, LLP 369 Lexington Avenue, 12 1h Floor New York, NY 10017 Timothy J. Nieman, Esquire C Attorney I.D. No. 66024 C 2 -n RHOADS & SINON LLP .43 rs "? One South Market Square, 12th Floor Zrn -0 M- P.O. Box 1146 Harrisburg, PA 17108-1146 Telephone: (717) 233-5731 r'- Facsimile: (717) 238-8623 > t-) 3 +?, ` 1t TNeiman@Rhoads-Sinon.com Attorneys for Defendant RITE AID HDQTRS. CORP., VS. Plaintiff, CTA DIGITAL, Defendant. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 11-9222 CIVIL TERM CIVIL ACTION - LAW ANSWER TO NEW MATTER Defendant C T A Digital Inc. (sued herein as CTA Digital) ("Defendant"), by and through its undersigned counsel, as and for its Answer to New Matter respectfully: 1. Neither admits nor denies the allegations set forth in Paragraph 1 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 1 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 2. Neither admits nor denies the allegations set forth in Paragraph 2 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 2 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is 841330.1 incorporated herein by reference. 3. Neither admits nor denies the allegations set forth in Paragraph 3 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 3 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 4. Neither admits nor denies the allegations set forth in Paragraph 4 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 4 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 5. Neither admits nor denies the allegations set forth in Paragraph 5 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 5 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 6. Neither admits nor denies the allegations set forth in Paragraph 6 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 6 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 7. Neither admits nor denies the allegations set forth in Paragraph 7 of the New 2 Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 7 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 8. Neither admits nor denies the allegations set forth in Paragraph 8 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 8 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 9. Neither admits nor denies the allegations set forth in Paragraph 9 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 9 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 10. Neither admits nor denies the allegations set forth in Paragraph 10 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 10 of the New Matter for the reasons outlined in its Answer, New Matter and Counterclaim, which is incorporated herein by reference. 11. Neither admits nor denies the allegations set forth in Paragraph 11 of the New Matter as they constitute statements and/or conclusions of law to which no response is required. To the extent a response is deemed appropriate, denies the allegations set forth in Paragraph 11 of the 3 New Matter and reserves the right to respond to any additional defenses that Plaintiff may raise. WHEREFORE, Defendant demands judgment against Plaintiff in an amount in excess of $50,000.00, together with their costs and attorneys fees and any other relief that is just and appropriate. Respectfully submitted, RHOADS & SINON LLP By: Timothy J. Nieman One South Market Square P. O. Box 1146 Harrisburg, PA 17108-1146 (717) 233-5731 Eric C. Zabicki, Esquire Pick & Zabicki LLP 369 Lexington Avenue, 12th Floor New York, New York 10017 Telephone: (212) 695-6000 Attorneys for Defendant C T A Digital, Inc. DATED: April 41 2012 4 VERIFICATION LIPA MARKOWITZ deposes and says, subject to the penalties of 18 Pa.C.S. §4904 relating to unsworn falsification to authorities, that he is the Secretary and Treasurer of C T A Digital Inc., that he makes this verification by its authority and that the facts set forth in the foregoing Answer to New Matter are true and correct to the best of his knowledge, information and belief. 1 LIPA MARKOWITZ CERTIFICATE OF SERVICE I hereby certify that on this 149 day of April, 2012, a true and correct copy of the foregoing document was served by means of United States mail, first class, postage prepaid, upon the following: Brian P. Downey, Esq. Tucker P. Hull, Esq. Pepper Hamilton LLP 100 Market Street, Suite 200 P.O. Box 1181 Harrisburg, PA 17108-1181 TAIL RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, : NO. 11-9222 CIVIL TERM vs. CTA DIGITAL CIVIL ACTION - LAW Defendant. PRAECIPE FOR ENTRY OF APPEARANCE rr i ? TO THE PROTHONOTARY: o i., Kindly enter my appearance on behalf of Plaintiff Rite Aid Hdgtrs. Date: February 19, 2013 Respectfully submitted, Kathleen A. Mullen (PA 84604) PEPPER HAMILTON LLP 100 Market Street, Suite 200 P. O. Box 1181 Harrisburg, PA 17108-1181 Phone: 717.255.1155 Fax: 717.238.0575 Email: mullenk@pepperlaw.com Attorneys for Plaintiff Rite Aid Hdqtrs. Corp. CERTIFICATE OF SERVICE I, Kathleen A. Mullen, hereby certify that on February 19, 2013, a true and correct copy of the foregoing praecipe was served via First Class U. S. Mail, postage prepaid upon the following: Eric C. Zabicki, Esquire PICK & ZABICKI, LLP 369 Lexington Avenue, 12th Floor New York, NY 10017 Timothy J. Nieman, Esquire RHOADS & SINON, LLP P. O. Box 1146 Harrisburg, PA 17108-1146 Kathleen A. Mullen (PA 84604) RITE AID HDQTRS. CORP., IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, vs. NO. 11-9222 CIVIL TERM M CTA DIGITAL, ' Defendant. 4 °: a CERTIFICATE PREREQUISITE TO SERVICE r OF SUBPOENA PURSUANT TO RULE 4009.22 As a prerequisite to service of a subpoena for documents and things pursuant to Rule 4009.22, plaintiff s counsel certifies that CTA Digital has agreed to waive the notice period pursuant to Pa. R. Civ. P. 4009.21 et seq. A copy of the Notice of Intent is attached as Exhibit A. Date: March 26, 2013 �4 U-1- h . RL Brian P. Downey(PA 59891) Kathleen A. Mullen(PA 84604) PEPPER HAMILTON LLP 100 Market Street, Suite 200 P. O. Box 1181 Harrisburg, PA 17108-1181 Phone: 717.255.1155 Fax: 717.238.0575 Email: downeyb @pepperlaw.com mullenk @pepperlaw.com Attorneys for Plaintiff Rite Aid Hdqtrs. Corp. ��� . I ` RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, NO. 11-9222 CIVIL TERM VS. CTA DIGITAL CIVIL ACTION - LAW Defendant. PLAINTIFF'S NOTICE OF INTENT TO SERVE A SUBPOENA TO PRODUCE DOCUMENTS AND THINGS FOR DISCOVERY PURSUANT TO RULE 4009.21 OF THE PENNSYLVANIA RULES OF CIVIL PROCEDURE TO: COUNSEL FOR DEFENDANT Plaintiff Rite Aid Hdqtrs. Corp. intends to serve a subpoena identical to the one that is attached to this Notice. You have twenty (20) days from the date listed below in which to file of record and serve upon the undersigned an objection to the subpoena. If no objection is made the subpoena may be served. Date: March 11, 2013 Brian P. Downey(PA 59891) Kathleen A. Mullen(PA 84604) PEPPER HAMILTON LLP 100 Market Street, Suite 200 P. O. Box 1181 Harrisburg, PA 17108-1181 Phone: 717.255.1155 Fax: 717.238.0575 Email: downeyb @pepperlaw.com mullenk@pepperlaw.com Attorneys for Plaintiff Rite Aid Hdgtrs Corp. COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND RITE AID HDQTRS. CORP Plaintiff File No. 11-9222 CIVIL TERM vs. CTA DIGITAL CIVIL ACTION-LAW Defendant SUBPOENA TO ATTEND AND TESTIFY TO: ESSENTIALS MARKETING, LLC, 301 Oxford Valley Rd., Suite 1903A, Yardley, PA 19067 1. You are ordered by the court to come to Pepper Hamilton LLP,Suite 200, 100 Market Street (Specify Courtroom or other place) at Harrisburg , Dauphin County, Pennsylvania, on April 1 S,2013 at 10:00 o'clock, A. M,. to testify on behalf of Plaintiff Rite Aid Hdqtrs.Corp. in the above case, and to remain until excused. 2. And bring with you the following: See attached Rider. If you fail to attend or to produce the documents or things required by this subpoena, you may be subject to the sanctions authorized by Rule 234.5 of the Pennsylvania Rules of Civil Procedure, including but not limited to costs, attorney fees and imprisonment. REQUESTED BY A PARTY/ATTORNEY IN COMPLIANCE WITH Pa.R.C.P.No.234.2(a): Name: Kathleen A.Mullen Address: Papper Hamilton LLP Suite 200,100 Market Street,P.O.Box 1181,Harrisburg,PA 17108-1181 Telephone: (717)255-1155 Supreme Court ID# PA 84604 BY THE COURT: Prothonotary/Clerk,Civil Division Date: Seal of the Court Deputy Official Note: This form of subpoena shall be used whenever a subpoena is issuable, including hearings in connection with depositions and before arbitrators,masters,commissioners,etc. in compliance with Pa.R.C.P.No.234.1. If a subpoena for a production of documents, records or things is desired,complete paragraph 2. (Eff. 7/97) SUBPOENA RIDER I. Definitions A. "You", "Essentials Marketing"or"Feder" shall mean Essentials Marketing and/or Debi Feder and where applicable, Essential Marketing's subsidiaries, affiliates,parent corporations,employees, agents, attorneys, representatives or any other persons or entities acting or purporting to act in concert with or on Essential Marketing's behalf. B. "Plaintiff'or"Rite Aid" shall include Plaintiff Rite Aid Hdqtrs. Corp., along with any subsidiary or affiliate of either, and where applicable, Rite Aid's employees, agents, attorneys,representatives or any other persons or entities acting or purporting to act in concert with or on Rite Aid's behalf. C. "Defendant"or"CTA"shall mean CTA Digital, Inc. and, where applicable any employees, agents, attorneys, representatives or any other persons or entities acting or purporting to act on in concert with or on Defendant's behalf. D. "Document" shall be defined to the broadest extent permitted by the applicable rules and shall include, without limitation, every writing or record of every type and description that is or has been in your possession, control or custody, or of which you have knowledge, including but not limited to videotapes,photographs, charts, notes, records, reports, letters, memoranda, books, magazines, notebooks, diaries,papers, agreements, contracts, bills, statements, invoices, analyses,transcripts, correspondence,telegrams,a mails, drafts, data processing discs or tapes and computer produced interpretations thereof, instructions, announcements and sound recordings and transcripts thereof. Document shall also include all copies that are not identical to the original, such as those bearing marginal comments, alterations or other notations not present on the original document as originally written, typed or otherwise prepared. E. "Related to,""relating to,"or"relates to"means supporting, connected with, regarding, constituting, containing, discussing,concerning,referring to, evidencing, or in any way pertaining to the subject matter of the Request for Production where used. -1- I1. Documents To Be Produced 1. Any and all documents in any way related to Essentials Marketing's representation of CTA in any and all business dealings with Rite Aid, including but not limited to the negotiation and/or execution of any and all contracts between CTA and Rite Aid, sales of CTA products to Rite Aid, returns of products by Rite Aid to CTA, the payment plan conveyed by Essentials Marketing on or about April 18, 2011 and/or any and all fees incurred by CTA in its dealings with Rite Aid; 2. Any and all documents in any way related to LTA's business dealings with Rite Aid, including but not limited to the negotiation and/or execution of any and all contracts between CTA and Rite Aid, sales of CTA products to Rite Aid,returns of products by Rite Aid to CTA,the payment plan conveyed by Essentials Marketing on or about April 18, 2011 and/or any and all fees incurred by CTA in its dealings with Rite Aid; 3. Any and all documents in any way related to any communications between Essential Marketing, including its agents, employees,officers or directors, or any and all persons acting on its behalf, and CTA including its agents,employees,officers or directors, or any and all persons acting on its behalf, in any way concerning CTA's business dealings with Rite Aid, including but not limited to the negotiation and/or execution of any and all contracts between CTA and Rite Aid, sales of CTA products to Rite Aid,returns of products by Rite Aid to CTA,the payment plan conveyed by Essentials Marketing on or about April 18, 2011 and/or any and all fees incurred by CTA in its dealings with Rite Aid; and 4. Any and all documents in any way related to any communications between Essential Marketing, including its agents, employees, officers or directors, or any and all persons acting on its behalf, and Rite Aid, including its agents,employees,officers or directors, or any and all persons acting on its behalf, in any way concerning CTA's business dealings with Rite Aid, including but not limited to the negotiation and/or execution of any and all contracts between CTA and Rite Aid, sales of CTA products to Rite Aid, returns of products by Rite Aid to CTA,the payment plan conveyed by Essentials Marketing on or about April 18, 2011 and/or any and all fees incurred by CTA in its dealings with Rite Aid. -2- CERTIFICATE OF SERVICE I, Kathleen A. Mullen, hereby certify that on March 11, 2013, a true and correct copy of the foregoing Notice of Intent to Serve Subpoena was served via First Class U. S. Mail, postage prepaid upon the following: Eric C. Zabicki, Esquire PICK& ZABICKI, LLP 369 Lexington Avenue, 12th Floor New York,NY 10017 Timothy J.Nieman, Esquire RHOADS & SINON, LLP P. O. Box 1146 Harrisburg, PA 17108-1146 Kathleen A. Mullen(PA 84604) CERTIFICATE OF SERVICE I, Kathleen A. Mullen, hereby certify that on March 26, 2013, a true and correct copy of the foregoing Certificate Prerequisite was served via First Class, U.S. Mail,postage prepaid, upon the following: Eric C. Zabicki, Esquire PICK& ZABICKI, LLP 369 Lexington Avenue, 12'h Floor New York,NY 10017 Timothy J.Nieman, Esquire RHOADS & SINON, LLP P. O. Box 1146 Harrisburg, PA 17108-1146 . athleen A. Mullen(PA 846 4) �y RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS.OF CUMBERLAND COUNTY, PENNSYLVANIA_ Plaintiff, NO. 11-9222 CIVIL TERM VS. CTA DIGITAL CIVIL ACTION - LAW ; Defendant. �- `- r. C� t PRAECIPE FOR ENTRY OF APPEARANCE TO THE PROTHONOTARY: Kindly enter my appearance on behalf of Plaintiff Rite Aid Hdqtrs. Corp. Date: April 29, 2013 Respectfully submitted, Stacey.I. G egory(PA 90290) PEPPER HAMILTON LLP 100 Market Street,.Suite 200 P. O. Box 1181 Harrisburg, PA 17108-1181 Phone: 717.255.1155 Fax: 717.238.0575 Email: gregorys @pepperlaw.com Attorneys for Plaintiff Rite Aid Hdqtrs. Corp. , CERTIFICATE OF SERVICE I, Stacey I. Gregory, hereby certify that on April 29, 2013, a true and correct copy of the foregoing praecipe was served via First Class U. S. Mail, postage prepaid upon the following: Eric C. Zabicki, Esquire PICK& ZABICKI, LLP 369 Lexington Avenue, 12th Floor New York,NY 10017 Timothy J. Nieman, Esquire RHOADS & S1NON, LLP P. O. Box 1146 Harrisburg, PA 17108-1146 Stacey 1. Gre ry (PA 90290) RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, C NO. 11-9222 CIVIL TERM c a Vs. rn Q7 =M _ r rI 3X" CTA DIGITAL, CIVIL ACTION - LAW 3> t- •-i o C:)--n Defendant. _ � —CD fr" .� cn . x IT IS HEREBY STIPULATED AND AGREED, by and between the undersigned attorneys for the parties hereto, that the annexed ORDER for the Protection and Exchange of Confidential Information (the "Confidentiality Order") be submitted to the Court with a request that the Court enter it as an Order of the Court. IT IS FURTHER STIPULATED AND AGREED, by and between the undersigned attorneys for the parties hereto, that the parties will abide by the terms of the Confidentiality Order from the time this Stipulation is signed, regardless as to when or if the Court signs the Confidentiality Order, except to the extent compliance would require the entry of such an Order. {i Respectfully submitted, / t Brian P. Downey(PA 59891) Timothy J.Nieman(PA 66024) Kathleen A. Mullen(PA 84604) RHOADS & S1NON LLP Tucker R.Hull(PA306426) One South Market Square, 12th Floor PEPPER HAMILTON LLP P. O. Box 1146 Suite 200, 100 Market Street Harrisburg, PA 17108-1146 P.O. Box 1181 Phone:(717)233-5731 Harrisburg, PA 17108-1181 Fax: (717)2318-8623 Phone: (717)25.5-1155 Email: tneiman @rhoads-sinon.com Fax: (717)238-0575 Email: downeyb @pepperlaw.com Eric Zabicki mullenk @pepperlaw.com Pick& Zabicki, LLP hullt @pepperlaw.com 369 Lexington Avenue, 12th Floor New York,NY 10017 Attorneys for Plaintiff Rite Aid Hdqtrs. Corp. Phone: (212)695-6000 Fax: (212)695-6007 Email: ezabicki @picklaw.net Attorneys for Defendant CTA Digital Date: Aprit_,2013 -2- RITE AID HDQTRS. CORP, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, NO. 11-9222 CIVIL TERM vs. CTA DIGITAL, CIVIL ACTION - LAW Defendant. CONFIDENTIALITY AGREEMENT WHEREAS, the parties hereto have stipulated to the signing and entry of this Order for the Protection and Exchange of Confidential Information ("Confidentiality Order" or "Order"), and for good cause shown, IT IS HEREBY ORDERED: 1. The term "document" or "documents" is used herein in the broadest sense to mean all documents, writings and things, including, without limitation, interrogatory responses, deposition transcripts, exhibits and other discovery materials, whether printed, recorded or reproduced by any other mechanical or electronic process, or written or produced by hand. 2. "Litigation" as used herein means the above-captioned civil action. 3. "Confidential" documents as used herein means documents that the producing parry in good faith designates as "Confidential" at the time of production by means of a listing of the production numbers appearing on such documents or by means of a "Confidential" stamp or legend placed on such documents. Notwithstanding the foregoing, a producing party's inadvertent failure to designate a document "Confidential" in accordance with the terms of this Order will not preclude a later designation to the extent that confidential treatment can still be obtained without undue burden or expense on any party to the Litigation. 4. All Confidential documents, as defined herein, produced by any party or non-party in the Litigation shall be used by any party receiving or reviewing them only for the purpose of preparing for and conducting the Litigation. 5. Confidential documents, or information derived therefrom, may only be disclosed or made available by the party receiving such information to "Qualified Persons," who consist of: a. the Court (in the manner provided by paragraph 11 hereof); b. outside or in-house counsel to the parties to the Litigation, and clerical, secretarial and paralegal staff employed by such counsel; C. clerical or ministerial service providers, such as outside copying or litigation support personnel, retained by the parties or counsel; d. court reporters; e. experts or consultants and their staff assisting in the Litigation who are not otherwise employed by any party to the Litigation, and the party receiving such information shall keep a list of the names of these individuals; f. all individuals who are named parties and the officers, employees and affiliates of corporate named parties who are assisting in the prosecution or defense of the Litigation or who will be responsible for making decisions with respect to the Litigation; and g. any other person the producing party agrees to in writing. 6. Confidential documents shall not be disclosed to persons other than Qualified Persons and no action shall be taken (other than in connection with this Litigation) on -2- A , the basis of any Confidential documents by the party receiving them. Nothing contained herein shall prevent any party from using or disclosing its own Confidential documents or information as it deems appropriate. 7. Prior to seeing or receiving Confidential documents, all persons specified in paragraphs 5(e) and 5(g) will execute an Agreement to be Bound by Order in the form of Exhibit A attached hereto. 8. Testimony given at a deposition may be designated "Confidential" by an appropriate statement at the time of the giving of such testimony, or a party may designate portions of depositions as "Confidential" after transcription, provided written notice of such designation is given to all parties within seven days after receipt of the transcript of the proceedings, during which period all deposition transcripts shall be treated as"Confidential." 9. Nothing herein.shall require disclosure of any documents or information that counsel contends are protected from disclosure by the attorney-client privilege, work- product doctrine or any other legally recognized privilege. 10. The, inadvertent production of any documents during the Litigation shall be without prejudice to any claim that such material is privileged under the attorney-client privilege, work-product doctrine or any other legally recognized privilege, and no party shall be held to have waived any rights by such inadvertent production. Upon written request by the inadvertently producing party, the receiving party shall (a) return the original and all copies of such documents and (b) shall not use such information for any purpose unless allowed by Order of the Court. No party shall be precluded from arguing that it would be prejudiced if it were (a) forced to return material to the inadvertently producing party, or (b) precluded from utilizing such inadvertently produced materials in the Litigation. -3- J 11. If any Confidential documents (including portions thereof or information derived therefrom) are to be filed with the Court, such documents shall be filed in sealed envelopes or other appropriate sealed containers and marked with the caption of the Litigation and a statement substantially in the following form: CONFIDENTIAL FILED UNDER SEAL PURSUANT TO A PROTECTIVE ORDER, DATED , 2013, GOVERNING CONFIDENTIALITY OF DOCUMENTS AND INFORMATION OBTAINED DURING THE COURSE OF THIS LITIGATION. THIS ENVELOPE IS NOT TO BE OPENED NOR THE CONTENTS THEREOF DISPLAYED OR REVEALED EXCEPT BY OR TO QUALIFIED PERSONS OR BY COURT ORDER. All such materials so filed shall be kept under seal by the Clerk of the Court separate from public records in the Litigation and shall be released only upon.further Court Order. 12. Within sixty days after the conclusion of the Litigation, all Confidential documents and any copies thereof, and all documents containing information derived therefrom, shall be returned. In the alternative, the parties and their attorneys of record may provide affidavits stating under oath that all Confidential documents, including any and all copies thereof, have been destroyed, shredded or otherwise rendered completely and entirely illegible. Attorney work product and briefs, pleadings, written discovery responses, transcriptions of testimony and other Court papers prepared for use in the Litigation need not be returned or destroyed, but shall be kept Confidential by counsel for the parties and remain subject to the restrictions herein. 13. Each Qualified Person who is not a lawyer representing the parties to the Litigation or employed by a lawyer representing the parties to the Litigation to whom Confidential documents are disclosed pursuant to this Order shall be advised that the Confidential documents are being disclosed pursuant to, and subject to the terms of, this Order. -4- 14. If Confidential documents or information derived therefrom in the possession of a receiving party is subpoenaed by any court, administrative or legislative body, or any other person purporting to have authority to subpoena such information, the party to whom the subpoena is directed shall give written notice of the subpoena (including delivery of a copy thereof) to the attorneys for the producing party not less than five business days prior to the time when production of the information is requested by the subpoena. In the event that the subpoena purports to require production of such Confidential documents or information derived therefrom on less than five days' notice, the party to whom the subpoena is directed shall give immediate telephonic notice of the receipt of such subpoena, and forthwith deliver by hand or facsimile a copy thereof, to the attorneys for the producing party. Absent a court order to the contrary, the party to whom the subpoena is directed may comply therewith; however, if application for a protective order is made promptly before the return date, the party to whom the subpoena is directed shall not produce such Confidential documents or information derived therefrom prior to receiving a court order or the consent of the producing party. For purposes of this section, "subpoena" includes a"notice to produce" and its equivalent. 15. Designation of any document as "Confidential" shall not preclude any party from contending that a designated document or transcript does not qualify for confidential treatment, shall not create any presumption that documents and transcripts so designated are confidential, and shall not shift the burden of establishing entitlement to confidential treatment. If any party objects to the designation of any document as Confidential, the party shall state the objection with particularity by letter to counsel for the party making the designation. If the parties are unable to resolve the objection, the designating party may move the Court to have the document deemed to be Confidential under the terms of this Order within fifteen (15) days of the -5- objection. Until the Court rules on any such motion, the document shall continue to be deemed Confidential under the terms of this Order. If no motion is made, the designation will be deemed withdrawn as to the document subject to the objection. A party designating documents as Confidential bears the burden of persuading the Court that any document is entitled to the protections afforded to Confidential documents under this Order. The failure to make a timely objection shall not be deemed a waiver of any right to object to the designation of any document as Confidential. 16. This Order shall be applicable to discovery provided by any third-party witnesses or other parties in the Litigation who agree in writing to be subject to and bound by the terms of this Order. 17. The binding effect of this Order shall survive termination of the Litigation and the Court shall retain jurisdiction to enforce the Order. 18. This Order shall be governed by, construed, and interpreted in accordance with the laws of the Commonwealth of Pennsylvania. The parties shall submit to the jurisdiction of this Court for the purpose of enforcement of the terms and conditions of this Order, as well as any action based upon any breach of this Order by any of the parties. 19. The parties agree to be bound by the terms of this Order pending the entry by the Court of this Order, or an alternative thereto which is satisfactory to all parties, and any violation of its terms shall be subject to the same sanctions and penalties as if this Order had been entered by the Court. 20. The parties have shown good cause for issuance of this Order. The court records must be sealed so as to prevent the dissemination of highly confidential corporate -6- information, including contractual and financial matters, which may result in substantial economic harm to the parties. 21. This Order may be modified by the Court upon application of any party. BY THE COURT: Date: J. (7y C_- -, =C) CD c. A), A 4t i" - Brian P. Downey (PA 59891) Kathleen A. Mullen (PA 84604) PEPPER HAMILTON LLP 100 Market Street, Suite 200 PO Box 1181 Harrisburg, PA 17108-1-181 717.255.1155 717.238.0575. (fax) Attorneys for Plaintiff Rite Aid Hdgtrs. Corp. RITE AID HDQTRS. CORP., Plaintiff, vs. CTA DIGITAL Defendant. t 1 2014DEc24 tI3 f Er;I:sYLVANIA : IN THE COURT OF COMMON PLEAS : OF CUMBERLAND COUNTY, : PENNSYLVANIA : NO. 11-9222 CIVIL TERM JOINT PRAECIPE TO DISCONTINUE TO THE PROTHONOTARY: Please mark all claims and counterclaims in the above -captioned matter settled and discontinued with prejudice pursuant to Pa. R.C.P. 229. . Do ey (P: 59891 Kath - : , :. 4, PA -8 r,, ; . PEPPER TON LLP 100 Market Street, Suite 200 P.O. Box 1181 Harrisburg, PA 17108-1181 Attorneys for Plaintiff Respectfully submitted, ..0"L"`":2" -- Timothy J. Nie an (PA 66024) Rhoads & Sinon 1 South Market Square, 12th Floor P. O. Box 1146 Harrisburg, PA 17108-1146 Attorneys for Defendant CERTIFICATE OF SERVICE I hereby certify that on December 23, 2014, I served a copy of the foregoing document upon defendant's counsel by United States mail, first class postage prepaid, addressed as follows: Timothy J. Nieman, Esq. Rhoads & Sinon 1 South Market Square, 12th Floor P.O. Box 1146 Harrisburg, PA 17108-1146 a ela Bishop