Christensen, et al. v. Cox (Lawyers Weekly No. 09-043-17)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIVIL ACTION No. 17-01635-BLS1 CLAYTON M. CHRISTENSEN & others1 vs. SHAWN E. COX MEMORANDUM OF DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS Plaintiffs, Dr. Clayton M. Christensen (Clayton), Matthew Q. Christensen (Matthew),2 Disruptive Innovation GP, LLC (Disruptive Innovation), and Rose Park Advisors, LLC (Rose Park), filed this action against defendant, Shawn E. Cox, a former employee of Rose Park. Plaintiffs assert the following six claims against Cox in their Complaint: declaratory judgment (Count I), unilateral mistake (Count II), breach of fiduciary duty (Count III), breach of contract (Count IV), violation of G.L. c. 272, § 99(Q) (Count V), and violation of G.L. c. 214, § 1B (Count VI). Cox moves to dismiss plaintiffs’ Complaint in its entirety under Mass. R. Civ. P. 12(b)(6) and Mass. R. Civ. P. 9(b). For the reasons stated below, Cox’s motion to dismiss is allowed in part and denied in part. BACKGROUND The facts as revealed by the Complaint are as follows. 1 Matthew Q. Christensen, Disruptive Innovation GP, LLC, and Rose Park Advisors, LLC. 2 To avoid confusion, the Christensens will be referred to by their first names. Matthew is the principal founder, CEO, and Managing Partner of Rose Park and Disruptive Innovation. He is responsible for the management of Disruptive Innovation. Clayton is a professor at Harvard Business School. He created and developed the theory of “disruptive innovation,” which businesses use throughout the world. Both Matthew and Clayton are members of Disruptive Innovation. Rose Park is a Delaware limited liability company that the Christensens organized in 2007. It is an investment firm that the Christensens founded to apply the theory of disruptive innovation. Rose Park invests in companies whose business models are well-suited to take advantage of industry change. Matthew manages Rose Park, and Clayton serves as an advisor to Matthew on matters related to the investment strategy of disruptive innovation. The Complaint does not provide a specific identification of the members of Rose Park. Disruptive Innovation is a Delaware limited liability company that serves as the general partner for the Disruptive Innovation Fund, L.P. (Fund). Disruptive Innovation, as the Fund’s general partner, receives a performance fee based on the Fund’s performance. The performance fees are earned and realized at the end of the year; if the amount of performance fees exceeds the expenses incurred during the year, the result is profits. Rose Park serves as investment manager for the Fund. Cox is now a resident of Orem, Utah. Rose Park employed Cox from July 2010 through May 2013. Cox’s employment with Rose Park was “at will.” When Rose Park hired Cox, he signed the “Rose Park Advisors LLC Employee Handbook.” The handbook provides that, […]

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