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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, as an
employee, Cox would not disclose Rose Park’s proprietary and confidential information, even
after his employment with the company ended. The handbook also provides that Cox will not
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compete with Rose Park for three months after his employment ends and will not disparage Rose
Park or the Christensens at all times during and after his employment with Rose Park.3
As a component of Cox’s compensation at Rose Park, Cox received, at the sole discretion
of Disruptive Innovation and Rose Park, a share of the profits of Disruptive Innovation. Cox is a
certified public accountant with fund operations experience. As alleged in the Complaint, the
Christensens trusted Cox to carry out the daily operations of Rose Park, the Fund, and Disruptive
Innovation. Cox was responsible for working with outside legal counsel to prepare, review, and
approve company documents on the Christensens’ behalf. The Christensens and Disruptive
Innovation trusted Cox to ensure the accurate and complete implementation of their instructions
and intentions, which permitted Matthew to focus on making and managing all of the Fund’s
investments. The Christensens placed this high level of trust in Cox because he and Matthew
had a preexisting friendship, and they attended the same church. Cox accepted the trust and
responsibility placed upon him by the Christensens.
On January 13, 2013, Cox began secretly to pursue employment with another investment
firm, Clarke Capital Partners (Clarke Capital). He engaged in extensive discussions with James
Clarke, Clarke Capital’s founder and managing partner, and other Clarke Capital representatives.
In February of 2013, Cox requested, and received from Matthew, an increase in his
compensation at Rose Park based on a share of profits of Disruptive Innovation. The Complaint
alleges that Cox fraudulently induced Matthew to increase his compensation and that Matthew
would not have increased Cox’s compensation if he knew Cox planned to leave Rose Park.
3 The Rose Park employee handbook actually purports to impose various non-competition
restrictions on the employee for a “36 month period following termination” of employment.
Rose Park Advisors LLC Employee Handbook at 11.
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On April 1, 2013, Cox instructed a junior lawyer at the law firm representing Disruptive
Innovation to amend Disruptive Innovation’s Amended and Restated Limited Liability Company
Agreement dated January 1, 2009 (Operating Agreement). Cox instructed that the Operating
Agreement be amended to add himself as a “Member.” The Operating Agreement defined
“Member” as, “Clayton Christensen,” “Matthew Christensen,” and founding employee “Whitney
Johnson.” Matthew had authorized Cox to obtain an amendment of the Operating Agreement to
reflect the removal of Johnson as a Member. No one, however, authorized Cox to add himself as
a Member. Cox did not disclose to the Christensens or Disruptive Innovation that he had
instructed outside counsel to add himself as a Member of Disruptive Innovation under the
Operating Agreement.
On April 5, 2013, Cox delivered a one-page memo to Matthew. The memo is described
and referenced in the Complaint as a “Profit Sharing Memo.” Cox attaches a copy of the April 5,
2013 memo to his motion to dismiss, and argues that the court may consider the attachment
because the document is referenced in the Complaint.4 In their Opposition, plaintiffs do not
dispute that the April 5, 2013 document attached to the motion to dismiss is the April 5, 2013
document that plaintiffs called the “Profit Sharing Memo” in the Complaint.
Cox allegedly explained to Matthew that the April 5, 2013 memo was an update to the
annual profit sharing percentages to reflect the agreed upon increase in Cox’s compensation and
the redistribution of the percentage ownership that was previously allocated to Johnson. Cox,
however, failed to disclose to Matthew that the memo actually “details the changes in the Class B
4 This court may consider materials not appended to the Complaint, but referenced or
relied upon in the Complaint. See Harhen v. Brown, 431 Mass. 838, 839-840 (2000). See also
Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43, 45 n.4 (2004).
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Unit ownership for Disruptive Innovation GP, LLC,” as stated at the top of the April 5, 2013
memo. The memo references Cox as a “Member” owning 60,000 “Class B Units.” Class B
Units are described in Section 3.02(a)(i) of the Operating Agreement as follows:
Distributions attributable to Incentive Allocations made after January 1, 2009, to
the Company [Disruptive Innovation] in its capacity as general partner of the Fund
under section 6.06 of the Limited Partnership Agreement, and any earnings or
returns on such Incentive Allocation amounts, shall be made to the holders of
Class B Units based on the number of Class B Units held by each such holder
immediately prior to such distribution.
By documenting himself as owner of Class B Units, Cox allegedly was attempting to transform
his employment based annual profit sharing, which would terminate after Cox stopped working
for Rose Park, into an economic interest that Cox could retain even after he stopped working for
the company. Plaintiffs assert that Matthew signed the April 5, 2013 memo without reading it.
Matthew was allegedly under the misimpression, caused by Cox, that the document concerned
profit sharing, not ownership interests.
On April 12, 2013, Cox informed Matthew that he was quitting Rose Park and joining
Clarke Capital.
In early May 2013, Cox gave Matthew signature pages for the new version of the
Disruptive Innovation operating agreement that Cox had instructed Disruptive Innovation’s
outside counsel to draft in April 2013 (Updated Operating Agreement). Cox represented that the
document merely updated the Operating Agreement to remove Whitney Johnson as a member.
Cox asked Matthew and Clayton to sign the signature pages. Cox added a schedule at the end of
the document, “Schedule A,” that listed himself as being a “Member” and having “Unit
Ownership” of 60,000 “Class B Units.” Again, Cox failed to disclose this to the Christensens
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when they signed the Updated Operating Agreement. Although not specifically stated in the
Complaint, the facts alleged suggest that the Christensens executed the signature pages for the
Updated Operating Agreement without reading the entire document or noting Schedule A, listing
Cox as a member of Disruptive Innovation.
At the end of May 2013, Cox stopped working at Rose Park. In June 2013, Cox
requested a copy of the Updated Operating Agreement signature pages. The Christensens still
did not realize that Cox documented himself as a Member and Class B Units holder.
Sometime thereafter, Cox shocked the Christensens by asserting that he was a Member of
Disruptive Innovation, citing the April 5, 2013 memo and the Updated Operating Agreement as
evidence. He demanded payment as a Class B Units holder. Cox provided no consideration for
the units. Cox was allegedly aware that the Christensens never intended to give him an equity
interest in Disruptive Innovation. Plaintiffs claim that, “Cox had sufficient investment industry
experience to be aware that it would be virtually unprecedented for a non-founding, noninvestment,
short-tenured employee to be gifted a permanent entitlement to profits.” Complaint,
¶ 25.
In the years after Cox left Rose Park, the Christensens made various good faith efforts to
resolve this matter. In February 2015, plaintiffs paid Cox a $ 107,916.81 “Deferral Bonus.” Cox,
however, demanded more payments as a Class B Units holder.
Effective January 1, 2015, the Christensens amended the Operating Agreement to
formally document that Matthew was “Manager” of the Company and that the Members and Unit
holders of Disruptive Innovation were Matthew and Clayton (2015 Operating Agreement).
In May 2017, Cox allegedly attempted to extort money from Disruptive Innovation and
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the Christensens by representing that he recorded a telephone call in December of 2016 with
Clayton. The recorded conversation allegedly undermines Disruptive Innovation’s claim that Cox
is not entitled to Disruptive Innovation’s profits. Plaintiffs, however, assert that the call was a
“settlement conversation,” and that Clayton made a good faith attempt to resolve Cox’s claim
even though he was not involved in the matter. Clayton initiated the call and participated in it
while sitting in his office in Boston. Cox did not tell Clayton that their telephone conversation
was being recorded, and Clayton was unaware that it was being recorded. Clayton did not
consent to the recording. On May 26, 2017, plaintiffs commenced this action.
ANALYSIS
To survive a motion to dismiss, the plaintiff’s “[f]actual allegations must be enough to
raise a right to relief above the speculative level . . . [based] on the assumption that all the
allegations in the complaint are true (even if doubtful in fact) . . . .” Iannacchino v. Ford Motor
Co., 451 Mass. 623, 636 (2008), citing Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-1965
(2007). In other words, “[w]hile a complaint attacked by a . . . motion to dismiss does not need
detailed factual allegations . . . a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions . . . .” Iannacchino, 451 Mass.
at 636, quoting Bell Atl. Corp., 127 S. Ct. at 1966. Dismissal under Mass. R. Civ. P. 12(b)(6) is
proper where a reading of the complaint establishes beyond doubt that the facts alleged do not
support a cause of action which the law recognizes, such that the plaintiff’s claim is legally
insufficient. Nguyen v. William Joiner Center for the Study of War and Social Consequences,
450 Mass. 291, 295 (2007).
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Breach of Fiduciary Duty
In Count III of their Complaint, plaintiffs claim that Cox breached his fiduciary duties to
the Christensens and Disruptive Innovation based on his actions discussed above. See
Complaint, ¶ 64 (listing Cox’s actions and conduct that plaintiffs claim breached his fiduciary
duty to them).
Cox moves to dismiss the breach of fiduciary duty claim. In addition to contending that
plaintiffs are falsifying their claim (not a ground for dismissal under Rule 12), Cox argues that
the Christensens cannot pursue the claim because they are duty-bound to read what they signed.
Having admitted in the Complaint that they did not read the documents, the Christensens should
be barred from claiming a breach of fiduciary duty.
As an initial matter, Cox contends that Delaware law applies to all claims arising out of
the Updated Operating Agreement. Cox cites Section 9.06 of the Updated Operating Agreement
regarding “Applicable Law,” which states: “This Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted, construed and enforced in accordance
with the laws of the State of Delaware without regard to its principles of conflicts of laws.” The
problem, however, with Cox’s argument for Delaware law with respect to the claim for breach of
fiduciary duty are two-fold. First, Cox cannot bootstrap the contested Updated Operating
Agreement into being a binding contract on the operative law. Second, the fiduciary duty claim
against Cox is based on his conduct as an employee of Rose Park, not as a putative member of
Disruptive Innovation.
Another Superior Court judge sitting in the Business Litigation Session recently
recognized that:
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A choice-of-law provision, like any other contractual provision, will not be given
effect if the consent of one of the parties to its inclusion in the contract was
obtained by improper means, such as by misrepresentation, duress, or undue
influence, or by mistake. Whether such consent was in fact obtained by improper
means or by mistake will be determined by the forum in accordance with its own
legal principles.
Oxford Global Resources, LLC v. Hernandez, 1684CV03911-BLS2, 2017 WL 2623137, *2
(Mass. Super. Ct. June 9, 2017) (Salinger, J.), quoting Restatement (Second) of Conflict of Laws
§ 187 comment b (1971). Because it is contested as to whether the Updated Operating
Agreement is a valid contract between Cox and the Christensens, in their capacity as members of
Disruptive Innovation, Cox may not enforce the choice of law provision in the Updated
Operating Agreement. Moreover, the Christensens assert that Cox owed them and Disruptive
Innovation a fiduciary duty because of Cox’s unique role as an employee of Rose Park, not as a
putative member of Disruptive Innovation. That claim must be analyzed under Massachusetts
law because Cox was employed in Massachusetts and committed the alleged acts here.
Based on Massachusetts law, dismissal of the breach of fiduciary duty claim against Cox
in Count III is not warranted.5 “Whether . . . a fiduciary relationship exists in a particular case is
largely a question of fact.” Baker v. Wilmer Cutler Pickering Hale and Dorr LLP, 91 Mass. App.
Ct. 835, 837 (2017). “Employees occupying a position of trust and confidence owe a duty of
loyalty to their employer and must protect the interests of the employer.” Chelsea Industries, Inc.
5 Even if Delaware law applied to the breach of fiduciary duty claim, dismissal would still
not be warranted. See Triton Const. Co. v. Eastern Shore Elec. Servs., Inc., 2009 WL 1387115
at *9-*11 (Del. Ch. 2009), aff’d, 988 A.2d 938 (Del. 2010) (citation omitted) (recognizing that
“key managerial employees,” and even non-managerial employees, may be liable for breaches of
fiduciary duty based on hallmark principles of agency law and noting that “hallmark principles of
agency law apply to traditional corporate fiduciaries, such as officers and directors, and to key
managerial personnel”).
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v. Gaffney, 389 Mass. 1, 11 (1983).
As a fiduciary, Cox was obligated to disclose all material facts to the Christensens
regardless of whether the Christensens could have discovered the facts by reading the documents.
See Markell v. Sidney B. Pfeifer Foundation, Inc., 9 Mass. App. Ct. 412, 440-441 (1980) (noting
that “where a person is induced to sign a legal document by one standing in a fiduciary relation to
that person and where the fiduciary has an interest in the document’s execution . . . the document
can generally be avoided by its signer on a showing merely that the fiduciary failed to make him
aware of the legal significance of the signing of the document”). The document may be subject to
avoided if the fiduciary failed to make the person aware of the legal significance of signing of
the document. Id. at 440-441. “The rule is based on the principle that the fiduciary owes
complete and undivided loyalty to the person towards whom he stands in such a relation and
should not permit any other consideration to influence his actions or advice.” Id. at 441. See also
Passatempo v. McMenimen, 461 Mass. 279, 294-302 (2012) (noting that fiduciary owes a duty of
full disclosure and discussing reasonable reliance on misrepresentations from a trusted advisor);
Demoulas v. Demoulas Super Mkts., Inc., 424 Mass. 501, 519 (1997) (explaining that fiduciary
owes duty of full disclosure); Production Mach. Co. v. Howe, 327 Mass. 372, 375 (1951)
(recognizing that defendant failed to make “full disclosure which as a fiduciary he owed”).
Here, plaintiffs allege enough in their Complaint to plausibly suggest that Cox owed them
a fiduciary duty. Therefore, he was required to make a full disclosure of the contents of the
documents he presented to the Christensens. Taking the allegations regarding the procurement of
the Christensens execution of the documents as true, as I must at this stage of the case, the claim
for breach of fiduciary duty is plausible. Consequently, Cox’s request to dismiss the breach of
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fiduciary duty claim in Count III is denied.
Unilateral Mistake
In Count II, plaintiffs assert that this court should hold that the Updated Operating
Agreement is “invalid” because it is a result of a unilateral mistake.6 Complaint, ¶ 58. Cox
moves to dismiss plaintiffs’ claim of unilateral mistake for failure to state a claim upon which
relief can be granted under Mass. R. Civ. P. 12(b)(6). Cox argues that: (1) plaintiffs’ factual
allegations are insufficient to rescind a contract under unilateral mistake, and (2) the agreement
that the plaintiffs seeks to invalidate is so unambiguous on its face that it “ render[s] implausible
plaintiffs’ bald declarations of mistake.”
Massachusetts choice of law rules recognize that the state of incorporation dictates the
governing law in claims involving the internal affairs of a corporation. See Harrison v.
Netcentric Corp., 433 Mass. 465, 471-472 (2001) (applying general rule that law of state of
incorporation governs claims concerning internal affairs of a corporation). Plaintiffs concede in
the Complaint that Disruptive Innovation is a Delaware limited liability company. Plaintiffs’
claim for rescission of the Updated Operating Agreement necessarily involves the internal
corporate affairs of a Delaware corporation. The claim presupposes that Cox became a putative
member of a Delaware corporation, and requests that the membership be rescinded. Based solely
on the conceded fact that Disruptive Innovation is a Delaware company, Delaware law applies to
6 In Count II, plaintiffs are seeking rescission or avoidance of the Updated Operating
Agreement based on a unilateral mistake. They do not seek reformation of this document. See
Complaint, ¶ 58 (“Disruptive Innovation and the Christensens request that the Court hold that the
Updated Operating Agreement is invalid as a result of the aforementioned unilateral mistake.”).
See Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d
665, 677 (Del. 2013) (distinguishing between avoidance and reformation).
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this count.
Under Delaware law, “[r]escission of a transaction because of a unilateral mistake is an
extraordinary remedy.” FdG Logistics LLC v. A&R Logistics Holdings, Inc., 131 A.3d 842, 861
(Del. Ch. 2016). “It is only available under Delaware law when a party can demonstrate that (1)
the enforcement of the agreement would be unconscionable; (2) the mistake relates to the
substance of the consideration; (3) the mistake occurred regardless of the exercise of ordinary
care; and (4) it is possible to place the other party in the status quo.” Id. at 861-862 (citation and
internal quotation marks omitted).
Plaintiffs’ claim for unilateral mistake in Count II fails to state a claim under Delaware
law. Delaware allows rescission if “the mistake occurred regardless of the exercise of ordinary
care . . . .” FdG Logistics LLC v. A&R Logistics Holdings, Inc., 131 A.3d at 861-862. Plaintiffs
concede in the Complaint that they failed to read or review before signing the April 5, 2013
memo or the Updated Operating Agreement. As a matter of law, such conduct or lack of
conduct, is not the exercise of ordinary care. Scion Breckenridge Managing Member, LLC v.
ASB Allegiance Real Estate Fund, 68 A.3d at 677 (“We adhere to our case law holding that a
party cannot seek avoidance of a contract he never read.”). See also Graham v. State Farm Mut.
Auto. Ins. Co., 565 A.2d 908, 913 (Del. 1989) (“A party to a contract cannot silently accept its
benefits, and then object to its perceived disadvantages, nor can a party’s failure to read a
contract justify its avoidance.”). Plaintiffs’ claim for unilateral mistake in Count II is, therefore,
dismissed.
Breach of Contract
Plaintiffs claim in Count IV of the Complaint is based solely on the“Rose Park Advisors
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LLC Employee Handbook.” Plaintiffs claim that Cox breached the handbook by, among other
things, obtaining employment at Clarke Capital, disclosing confidential and propriety
information, and disparaging the Christensens and Rose Park. Cox moves to dismiss Count IV,
noting that the final section of the handbook on page forty-one is entitled, “Employee’s
Acknowledgment of the Purpose and Legal Effect of This Employee Handbook,” which states:
As RPA [Rose Park] provides the information contained in the Handbook for
general guidance only, employees should not expect RPA to adhere to these
policies and procedures in every instance. Accordingly, nothing stated in the
Handbook is intended or should be understood to create a binding contract
between RPA and any one or all of its employees.
. . .
Neither the Handbook, RPA practice, nor other oral or written policies or
statements of RPA or its agents shall create an employment contract, guarantee a
definite term of employment, or otherwise modify in any way the agreement and
understanding that employment with RPA is at-will.
Rose Park Advisors LLC Employee Handbook at 41. Cox signed the acknowledgment dated
June 3, 2011.
Plaintiffs’ breach of contract claim in Count IV must be dismissed. “[I]f the employer,
for whatever reason, does not want the [employment] manual to be capable of being construed by
the court as a binding contract, there are simple ways to attain that goal.” Ferguson v. Host Int’l,
Inc., 53 Mass. App. Ct. 96, 103 (2001) (citation omitted). “All that need be done is the inclusion
in a very prominent position of an appropriate statement that there is no promise of any kind by
the employer contained in the manual; that regardless of what the manual says or provides, the
employer promises nothing . . . .” Id. Plaintiffs required Cox to sign the “Employee’s
Acknowledgment of the Purpose and Legal Effect of This Employee Handbook,” which
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unequivocally states that the handbook does not create a binding contract between Rose Park and
its employees. The legal effect of plaintiffs’ decision to require Cox, an employee of Rose Park,
to sign this prominent statement at the end of the employee handbook is that they cannot now
pursue a breach of contract claim against Cox based solely on the employee handbook in Count
IV of the Complaint.
Wiretapping
Clayton brings wiretapping claims against Cox alleging violation of G.L. c. 272, § 99(Q)
in Count V and G.L. c. 214, § 1B in Count VI. See G.L. c. 272, § 99(Q) (providing a civil
remedy for violations of wiretap act). See also G.L. c. 214, § 1B (“A person shall have a right
against unreasonable, substantial or serious interference with his privacy. The superior court
shall have jurisdiction in equity to enforce such right and in connection therewith to award
damages.”). The Massachusetts Wiretap Act, G.L. c. 272, § 99, prohibits the recording of oral
communications without the consent of all parties. Commonwealth v. Blood, 400 Mass. 61, 66
(1987). However, “nothing in the wiretap statute suggests any intention to regulate conduct
outside the bounds of the Commonwealth.” Commonwealth v. Maccini, 22 Mass. L. Rptr. 393,
2007 WL 1203560, *2 (Mass. Super. Ct. Apr. 23, 2007) (Fabricant, J.). See Commonwealth v.
Wilcox, 63 Mass. App. Ct. 131, 139 (2005) (“The defendant cites no authority for the proposition
that G.L. c. 272, § 99, applies to recordings made outside of Massachusetts.”). See also Marquis
v. Google, Inc., 2015 WL 13037257, *9 (Mass. Super. Ct. Feb. 13, 2015) (Billings, J.)
(concluding that Massachusetts wiretap statute did not apply to out of state conduct); MacNeill
Engineering Co., Inc. v. Trisport, Ltd., 59 F. Supp. 2d 199, 202 (D. Mass. 1999) (holding that
secretly recording a conversation outside Massachusetts does not give rise to liability under G.L.
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c. 272, § 99Q even if call originated within Massachusetts). Moreover, Federal law permits
recording with the consent of one party to the communication. Commonwealth v. Blood, 400
Mass. at 67.
Counts V and VI are based on a call Clayton initiated from Massachusetts to Cox. The
Complaint alleges the following facts: In May 2017, Clayton initiated a call to Cox. Clayton was
in his office in Boston. Cox recorded the call. Cox did not tell Clayton that their conversation
was being recorded, and Clayton was unaware that it was being recorded. Clayton did not
consent to the recording.
At the October 24, 2017 hearing on Cox’s summary judgment motion, counsel for Cox
suggested that this court should dismiss Counts V and VI without prejudice to plaintiffs being
allowed to amend their Complaint to allege that Cox was in Massachusetts, and not in Utah, at
the time Cox made the alleged recording. Currently, the Complaint is silent as to Cox’s location
at the time he recorded the call.7 Plaintiffs do not allege that Cox was located in Massachusetts
at the time of the recording. Accordingly, the wiretap claim must be dismissed, without
prejudice. If plaintiffs have a good faith basis for alleging that Cox was located in Massachusetts
at the time of the recording, they may amend Count V to assert this fact.
Finally, plaintiffs’ claim in Count VI that the recording of the telephone call was a
violation of G.L. c. 214, § 1B. That claim is dismissed because “the Legislature has given
persons whose conversations are illegally intercepted a specific and exclusive statutory remedy”
under G.L. c. 272, § 99(Q). Tedeschi v. Reardon, 5 F. Supp. 2d 40, 46 (D. Mass. 1998).
Legally recording a telephone conversation is not an invasion of privacy.
7 The Complaint does allege that Cox is a resident of Orem, Utah.
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CONCLUSION
Defendant Shawn E. Cox’s Motion to Dismiss is ALLOWED in part and DENIED in
part as follows:
-The Motion is ALLOWED as to Count II (unilateral mistake), Count IV (breach of
contract), and Count VI (violation of G.L. c. 214, § 1B).
-The Motion is ALLOWED as to Count V (violation of G.L. c. 272, § 99(Q)), without
prejudice to amending the Complaint as to the wiretapping claim in Count V.
-The Motion is DENIED as to Count I (declaratory judgment) and Count III (breach of
fiduciary duty).
By the Court,
______________________________
Edward P. Leibensperger
Justice of the Superior Court
Dated: November 20, 2017
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