Conversion Therapy Providers Must Pay Damages Provided for in a Settlement Agreement for Breaching That Agreement and Violating a Related Injunction

M.F. v. JONAH (Jews Offering New Alternatives for Healing f/k/a Jews Offering New Alternatives to Homosexuality), _2021 N.J. Super. LEXIS ______ (App. Div. 2021). [Disclosure: I argued this appeal for the successful plaintiffs]. In June 2015, after several years of litigation and a three-week trial, a jury found that defendants had violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”). As the Appellate Division’s per curiam opinion today summarized, “plaintiffs [had] filed suit, alleging that defendants had engaged in deceptive and fraudulent practices by referring plaintiffs to conversion therapy, which defendants represented could reduce or eliminate plaintiffs’ ‘same-sex attractions.'”

The parties then entered into a settlement agreement. In connection with that agreement, the Law Division entered an injunction. Among other things, those documents provided that defendants would not appeal the jury verdict, that defendant JONAH (the entity through which the individual defendants (Arthur Goldberg, a defendant, and Elaine Berk, who was not a defendant but agreed to be bound by the settlement agreement and the injunction) perpetrated their fraudulent conduct) would dissolve, and that none of the defendants would “cease engaging, whether directly or through referrals, in any therapy, counseling, treatment or activity that has the goal of changing, affecting or influencing sexual orientation, ‘same sex attraction’ or ‘gender wholeness,’ or any other equivalent term, whether referred to as ‘conversion therapy,’ ‘reparative therapy,’ ‘gender affirming processes’ or any other equivalent term (“Conversion Therapy”), or advertising,or promoting Conversion Therapy or Conversion Therapy-related commerce in or directed at New Jersey or New Jersey residents ….” If defendants violated the injunction and/or breached the settlement agreement, they agreed to pay a fixed, substantial sum (“the Breach Damages” and “the Berk damages”) in attorneys’ fees for that violation or breach.

Defendants proceeded to create a new entity, JIFGA, which stood for “Jewish Institute for Global Awareness.” The individual defendants then made referrals for Conversion Therapy, in violation of the injunction and in breach of the settlement agreement. JIFGA received referral fees, through a crowdfunding website that it operated, in connection with those referrals.

Plaintiffs ferreted out defendants’ misconduct and filed a motion for relief in aid of litigants’ rights to redress the violations and breaches. The Law Division offered found violations and breaches but offered defendants the chance to cure, at least in part, by refunding the monies that JIFGA had realized from the referrals. JIFGA claimed to have refunded all those monies, but discovery showed that not all of those amounts had been refunded.

Plaintiffs filed a new motion, and the Law Division concluded that defendants had violated the injunction and breached the settlement agreement. The judge found that the evidence was clear that JIFGA was JONAH, that defendants had wrongfully made referrals, and that defendants’ incomplete refunds did not cure their violations and breaches. Defendants were ordered to pay the Breach Damages and the Berk damages for those violations, as agreed in the settlement agreement.

Defendants appealed, and today the Appellate Division affirmed. The panel (Judges Gilson, Moynihan, and Gummer) applied the abuse of discretion standard of review to the Law Division’s ruling on the motions for relief in aid of litigants’ rights.

Defendants made nine arguments, which the panel boiled down to four: “(1) whether defendants breached the Injunction Order and Settlement Agreement; (2) whether defendants cured all violations by refunding referral fees; (3) whether the trial court erred in ordering defendants to pay damages; and (4) whether the trial court erred by barring defendants from incorporating or serving in leadership positions with non-profit organizations in New Jersey.” The Appellate Division found defendants’ other arguments unworthy of discussion in a written opinion, citing the “that’s ridiculous” rule, Rule 2:11-3(e)(1)(E).

Citing a number of cases, the panel found that “JIFGA was a successor in interest to and continuation of JONAH,” as the Law Division had concluded. “The trial court found that JIFGA and JONAH had the same cofounders and codirectors–Goldberg and Berk; JIFGA was reachable at the same phone number and email addresses as JONAH; and JIFGA continued JONAH’s primary purpose of promoting conversion therapy through referrals to therapists. Moreover, while not cited in the trial court’s June 10, 2019 written decision, the record demonstrates JIFGA and JONAH occupied the same office space. Those findings are supported by the record.”

JIFGA’s crowdfunding website “violated the Injunction Order because it raised money for projects promoting conversion therapy and JIFGA retained four percent of the money collected for those projects.” Defendants and their amici asserted constitutional free speech arguments, but the panel declined to consider those contentions because they had not been raised below, and because amici cannot present arguments not offered by the parties. In any event, “defendants, including Berk, settled that case by agreeing to the limitations placed on them in the Injunction Order and Settlement Agreement. Such litigation-based restrictions do not violate First Amendment rights.”

The evidence of the violative referrals was clear, and included e-mails that were unambiguous. Moreover, “the trial judge had extensive experience with defendants because he had presided over a multi-year litigation, a three-week trial, and multiple post-verdict motions. The trial judge was, therefore, amply qualified to draw inferences from the evidence and to make factual findings based on his knowledge of the issues and the parties.”

Defendants argued that the language of the restrictions made it permissible to engage in referrals if that were done outside New Jersey. The Appellate Division disagreed. “The qualifying phrase ‘in or directed at New Jersey or New Jersey residents’ refers only to the last antecedent and does not modify the phrase concerning the injunction on referrals. This interpretation is consistent with the last antecedent rule, ‘a principle of statutory construction that holds that, unless a contrary intention otherwise appears, a qualifying phrase within a statute refers to the last antecedent phrase.” The panel cited two cases for that result. Besides, “the undisputed facts in the record establish a clear connection between defendants’ activities and New Jersey.”

Defendants also claimed that the damage amounts were too high. The Appellate Division rebuffed that argument. “The short and complete answer to that contention is that defendants agreed that those would be the damages if they breached the Injunction Order or Settlement Agreement.”

Finally, “[a]s a partial remedy for that breach, the [trial] court enjoined Goldberg and Berk from serving as directors or officers of any tax-exempt entity incorporated in New Jersey. After defendants moved for reconsideration, the court modified the limitation and allowed Goldberg to continue to serve as a president and board member of three specific organizations.” Those limitations were designed to prevent further violations by Goldberg and Berk and were authorized by the CFA, which permits injunctive relief.