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NTV Management, Inc. v. Lightship Global Ventures, LLC, et al. (Lawyers Weekly No. 12-080-17)

NO. 2016-0327-BLS1
This case arises out of a Consulting and Advisory Services Agreement (the Agreement) between the plaintiff, NTV Management, Inc. (NTV) and the defendant Lightship Global Ventures, LLC (Lightship). The defendant, Kent Plunkett, founded a company, Salary.Com, Inc., which, following a series of acquisitions, became a division of IBM. Plunkett and a colleague formed Lightship for the purpose of reacquiring Salary.Com from IBM. The Agreement, while containing some one-off terms, was in effect a non-exclusive brokerage agreement pursuant to which NTV would be due a commission if it found financing for the acquisition and a lesser fixed sum for introducing “at least ten qualified sources of capital.” Lightship did acquire, but not with equity or debt partners introduced to the deal by NTV. NTV, nonetheless, alleges that it is due fees under the Agreement and damages for a variety of other wrongful conduct on the part of the defendants. It has pled its complaint in seven counts: breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, unjust enrichment, deceit, a violation of Chapter 93A, violations of the Uniform Fraudulent Transfer Act, and a count to reach and apply stock or assets of (although curiously it has not
named, or the entity that presently owns it, as a defendant).
Apparently, concerned about matching NTV’s imaginative pleading measure for measure, the defendants have asserted five counterclaims against NTV: breach of a duty of confidentiality, breach of contract, defamation, misrepresentation, and tortious interference with contractual or business relations. These counterclaims are not the subject of a motion now before the court.
The case is before the court on the defendants’ motion for summary judgment dismissing all the claims asserted against them, and NTV’s cross-motion for summary judgment on part of its breach of contract claim. For the reasons that follow, the defendants’ motion is Allowed, in part, and Denied, in part, and NTV’s motion is Denied.
Based on the summary judgment record, the following facts are undisputed or viewed in the light most favorable to the non-moving party. was founded by Plunkett in 1999. It became a public company in 2007, and then was acquired by a firm called Kenexa, Inc. in 2010. In 2012, Kenexa was acquired by IBM, after which was operated as a division of that company or an IBM affiliate. In 2014, IBM informed Plunkett that it was interested in selling Also, in 2014, Plunkett and another former colleague at formed Lightship for the purpose of attempting to acquire from IBM. Lightship signed a Non-Disclosure Agreement with IBM which limited Lightship’s ability to disclose confidential information concerning to others, including that IBM was actively seeking to dispose of this asset. As is typical in these kinds of potential transactions, IBM set up a data room where confidential information concerning
3 could be reviewed by Lightship and potential investors who would finance the acquisition. The information available to potential investors did not include financial statements specific to because it was operated by IBM as division of a larger enterprise. In February, 2015, Lightship and IBM entered into an agreement that gave Lightship the exclusive right, for a period of time, to negotiate a purchase agreement for Lightship had previously entered into an investment banking relationship with the firm Stifel Nicolaus & Co. (Stifel) to assist it in the proposed acquisition.
Through Stifel, a number of potential investors were identified who signed NDAs with Lightship, were informed of the acquisition target, and given access to the data room. A number of potential investors presented Lightship with term sheets for an acquisition of In early 2015, a private equity firm called Genstar Capital signed an agreement with Lightship that gave it an exclusive right to try and negotiate a transaction with IBM. Genstar retained a firm, Alvarez and Marsal, to analyze’s earnings and prepare a report. This report was Genstar’s property. Genstar, however, failed to reach terms acceptable to IBM. Thereafter, a firm called Symphony Technology Group (Symphony) entered a similar agreement with Lightship, but it also failed to reach agreement with IBM. In July, 2015, Stifel informed Lightship that it would no longer represent it in connection with a transaction.
In July, 2015, a mutual acquaintance, Steven Sandler, introduced Plunkett to a principal of NTV. NTV was then a newly formed organization which was planning to raise a venture capital fund, although it did not yet have any investors. After discussions, Lightship and NTV agreed to enter into an investment banking relationship in which NTV would seek to find investors willing to finance the acquisition of After some negotiations, their relationship was memorialized in the Agreement which was executed on August 5, 2015. As
relevant to this case, the Agreement contained the following provisions.
The term of the Agreement was six months, but it could be terminated by either party on 14 days notice. Section 4 of the agreement had standard confidentiality terms. It also provided that: “NTV further agrees to abide by all terms and conditions of the NDA entered into between IBM and Lightship.” This meant that NTV should not disclose the name of the target,, or any of its data, to a potential investor identified by NTV until the investor had signed an NDA.
Most of provisions of the Agreement relevant to this case are found in a document entitled Scope of Work (SOW) that was an exhibit to the Agreement and made a part of it. The SOW described the services that NTV was going to provide Lightship as follows:
NTV will endeavor to source capital and structure financing transactions from agreed-upon target investors and/or lenders. NTV will facilitate and participate in meetings and due diligence with capital sources, structuring and negotiating terms, and closing financing for the Acquisitions as [Lightship’s] advisor.
With respect to fees potentially due NTV, the SOW provided:
[Lightship] will pay to NTV as transaction fees (collectively, “Fees”) at closing in cash the a [sic] success fee (the Success Fee”) equal to the greater of 3% of the value of the capital that NTV introduces to the project that is invested or $ 330,000. In the event a deal is consummated by management with investment or financial sponsorship other than parties introduced by NTV, but not including sources contacted and/or introduced by NTV, (ie: not a strategic buyer acquiring substantially all of the business other than incentive interests for and direct investment by management where such strategic partner and not management controls) and no success fee is earned, then NTV shall be entitled to a $ 330,000 advisory fee in consideration of its team’s effort, services, time, and opportunity costs associated with working with management, preparing materials, communication with potential sources of capital, and other services, provided NTV shall have introduced at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support. It is understood and agreed by the parties that: . . . (ii) NTV expects to introduce and facilitate investment from third party sources collectively able to finance all levels of the transactions (i.e., both equity and debt) and [Lightship] has agreed as to each level of the capital structure for which NTV has one or more sources of capital willing and able to provide financing that [Lightship] has agreed that the Company will close with such investor(s) introduced and facilitated by NTV and not with other investors who might offer such financing on
substantially the same terms; provided that if [Lightship] determines reasonably and in good faith that accepting financing from one or more of such investors would not be in the best interests of the Company and its management and shareholders (but specifically excluding as an interest of the Company avoidance of fees otherwise payable), [Lightship] shall not be required to close with such investor(s). If third parties not introduced by NTV shall offer better terms than parties introduced by NTV, then NTV will have the opportunity, within five days after notification to match such terms.
As is evident from the terms quoted above, NTV’s agreement with Lightship was not exclusive. If Lightship purchased with investors that NTV had not introduced to the deal, it would not be due a Success Fee. NTV might still, however, be due an advisory fee of $ 330,000, if it met the preconditions to the award of that fee described in the SOW.
NTV sent a brief email to 28 potential sources of capital describing the transaction in very general terms. While the parties dispute whether Plunkett approved all of these possible investors as qualified sources of capital before the email was sent, for the purposes of this motion, the court assumes that he did. Of these 28 email recipients, 12 expressed interest in looking more closely at the deal. NTV sent these potential investors a 12 page power point presentation that provided additional information about the proposed transaction, but did not identify the target, although a recipient might have been able to deduce its identity. Lightship admits that NTV scheduled meetings or calls between 7 of these responders and Plunkett. NTV asserts that it had three others ready to speak with Plunkett: Vector Capital, Princeton Capital and Silicon Valley Bank, but the meetings did not take place. These three investors will be addressed further in the “Discussion” section of this memorandum.
Of the potential investors contacted by NTV, only 4 executed NDAs. None of the potential investors contacted by NTV presented Lightship with a proposed term sheet for a transaction. NTV’s representatives testified at deposition that all of the investors it approached wanted audited or detailed financial statements for, which did not exist
because it was operated as a division of a larger group.
In August, 2015, Plunkett also began discussions with other investment banking firms, including Moorgate Capital Partners (Moorgate), with a view to finding investors to finance a acquisition. Several potential investors signed NDAs, performed due diligence in the IBM data room, and submitted term sheets. In October, Lightship began to focus on two potential investors, one of which—H.I.G. Capital (HIG)—was introduced by Moorgate. On November 3, 2015, Lighthouse and HIG entered into an Agreement providing HIG with a period of exclusivity in which to try and negotiate a purchase with IBM, as had been the case with Genstar and Symphony. HIG was offering to provide only the equity layer of financing, so the debt component would still be necessary even if HIG were more successful than Genstar or Symphony in reaching an agreement with IBM for the purchase of The terms of the debt financing would, of course, have to be acceptable to HIG, which would be contributing the equity at risk in the independent enterprise.
Lightship did not provide a copy of the November 3rd letter to NTV; nor was it required to do so. It is, however, undisputed that not long thereafter NTV was aware that HIG was negotiating with IBM for the purchase of In a November 22-23, 2015 email exchange between representatives of a potential debt investor, Ares Management (Ares), introduced to the deal by NTV, and NTV, Ares wrote to NTV: “We were potentially interested at 2-3X EBITDA leverage, but that was so far below HIG’s ask that we didn’t do much work. If that’s interesting, let us know.” In fact, by November 17, 2015, NTV was threatening to sue Lightship for having entered into the agreement with HIG. On December 14, 2015, Lightship sent NTV a letter stating that it was terminating the Agreement on 14 days notice.
HIG was still negotiating with IBM on December 29, 2015. It closed the transaction on
December 31, 2015, the last day that IBM was willing to move forward at HIG’s offering price. The debt was provided by Prudential. The financing included $ 17 million of equity from HIG and $ 55 million of debt from Prudential, which included $ 10 million of operating capital. The actual terms of the acquisition are not provided in the summary judgment record, but it appears that the acquirer was a new company (the proverbial Newco) owned in undisclosed percentages by HIG, Plunkett, and other members of management. At one time, spread sheets showing the sources and uses of funds to be provided HIG and a still unidentified debt financier included a $ 330,000 fee going to NTV, although that fee was not included in the final closing documents and no fee was paid to NTV.
Standard for Review
Summary judgment will be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v. Commissioner of Corr., 390 Mass. 419, 422 (1983). To prevail on its summary judgment motion, the moving party must affirmatively demonstrate the absence of a triable issue, and that the summary judgment record entitles it to a judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). “[A]ll evidentiary inferences must be resolved in favor of the [nonmoving party].” Boyd v. National R.R. Passenger Corp., 446 Mass. 540, 544 (2006).
The nonmoving party, however, cannot defeat a motion for summary judgment by merely asserting that facts are disputed. Mass. R. Civ. P. 56(e); LaLonde v. Eissner, 405 Mass. 207, 209 (1989). Rather, to defeat summary judgment, the nonmoving party must “go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.”
Kourouvacilis v. General Motors Corp., 410 Mass. 706, 714 (1991). “Conclusory statements, general denials, and factual allegations not based on personal knowledge [are] insufficient.” Cullen Enters., Inc. v. Massachusetts Prop. Ins. Underwriting Ass’n, 399 Mass. 886, 890 (1987), quoting Madsen v. Erwin, 395 Mass. 715, 721 (1985).
Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing
NTV asserts that breached the Agreement by failing to pay the 3% commission, or alternatively failing to pay the $ 330,000 advisory fee. The court will first address the claims asserting a breach for failure to pay the commission.
NTV argues that Lightship breached the Agreement by failing to tell NTV that it was talking to other investment banking firms. However, the Agreement was clearly not exclusive. Indeed, it contemplated what might happen if the transaction closed with investors not introduced by NTV. Lightship was under no obligation to inform NTV concerning other firms it was using to raise capital. NTV also complains that Lightship began focusing on HIG in October and signed an exclusivity arrangement with HIG on November 3, 2015. Never having introduced a potential investor that even submitted a term sheet to Lightship, NTV could not have been surprised that Lightship focused on a potential equity investor that did its due diligence, met with management, and submitted terms on which it would attempt to close a transaction with IBM. NTV also complains that HIG received a copy of the Alvarez and Marsal report; however, it paid Genstar for it. There is no evidence in the summary judgment record that Lighthouse would not have entered into negotiations with an investor generated by NTV, if any such investor presented a term sheet for a proposed transaction.
More specifically, NTV contends that there exists a triable issue of fact concerning whether MTV is due the 3% fee “under the lost opportunity doctrine.” This doctrine, however,
addresses the question of how lost profits may be proven when they are the consequence of a breach of contract or business tort. It is not a separate means of establishing a breach of contract or a tort. This doctrine simply has no application to this case. See, e.g., Herbert A. Sullivan, Inc. v. Utica Mutual Ins. Co., 439 Mass. 387, 413 (2003) (“An element of uncertainty is permitted in calculating damages . . . This is particularly the case in business torts, where the critical focus is on the defendant’s conduct.”) (emphasis supplied).
NTV argues that an investor that it introduced to the deal, Ares, “might” have “matched the terms that Prudential eventually offered on December 18, 2015.” There are two problems with this argument: one legal and one factual.
First, the Agreement provides: “If third parties not introduced by NTV shall offer better terms than parties introduced by NTV, then NTV will have the opportunity, within five days after notification to match such terms.” NTV never introduced a party to Lightship that offered to enter into a transaction, debt or equity, on any terms, and that includes Ares. Clearly, the contract envisions that a qualified investor introduced by NTV who had made an offer would be given a brief period to attempt to match or exceed a better offer made by another investor. It does not mean that NTV had the right to find a third-party that had never presented an offer sheet who might, on five days-notice, decide to invest more than $ 50 million on terms better than those offered by an investor prepared to close. There is no way to determine if an investor’s terms are better than those produced by an NTV introduced party, where the NTV party never submitted anything to compare.
Additionally, there is no evidence that Ares could possibly close on financing by December 31, 2015, the date by which IBM required the transaction be complete. The December 17, 2015 email from Ares to which NTV points expresses only a vague willingness to
talk to NTV about the deal. A previous November 23, 2015 email exchange between Ares and NTV shows that Ares had direct contact with HIG about this transaction, but HIG was looking for debt on terms that were of no interest to Ares. There is no evidence that HIG’s position ever changed. Indeed, Lightship submitted an affidavit from a managing director at Ares who attested that he had a good working relationship with HIG from other deals, he looked at material sent to him by HIG and spoke to HIG about it, and then told HIG that Ares would pass. NTV offers no evidence to contradict this affidavit. The summary judgment record contains no evidence creating a triable issue on the question of whether Ares would have presented matching or better terms than Prudential, if offered the opportunity to do so in late December, 2015. NTV’s speculation that this might have happened is insufficient.
NTV’s claims for breach of the implied covenant of good faith and fair dealing as it relates to the claim for the commission fails for similar reasons. There is simply no evidence that NTV brought the transaction to the attention of any potential investor who might have provided financing for this transaction on better terms than HIG and Prudential. Even assuming that there is evidence in the summary judgment record that Plunkett was not responsive to requests to meet with an NTV sourced investor, a debatable proposition, there is no evidence that any such investor was actually prepared to invest.1
Turning to the advisory fee, the Agreement states: “In the event a deal is consummated by management with investment or financial sponsorship other than parties introduced by NTV, . . .
1 A brief reference to Silicon Valley Bank is made in the opposition in this regard; however, again defendants have submitted an affidavit from a Managing Director of this firm in which he points out that Silicon Valley was’s banker when it was an independent company, and he knew about the proposed transaction, but never met with Plunkett or anyone else associated with the deal and never proposed any terms on which Silicon Valley would invest. NTV has not offered any deposition testimony or other evidence from Silicon Valley suggesting that it was ready to close on a transaction by December 31, 2015. For these reasons, there can be no 93A claim premised on a refusal to pay the 3% commission because there is no evidence that NTV generated a potential investor actually interested in financing the acquisition.
then NTV shall be entitled to a $ 330,000 advisory fee in consideration of its team’s effort, services, time, and opportunity costs associated with working with management, preparing materials, communication with potential sources of capital, and other services, provided NTV shall have introduced at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support.” With respect to this fee, Lightship maintains that NTV failed to “introduce[] at least 10 qualified sources of capital and remained engaged with [Lightship] and available to provide advice and support.” It concedes, for purposes of its motion for summary judgment, an introduction to 7 potential investors, but contends that there is no evidence in the record supporting the last 3, viz: Vector Capital, Princeton Capital and Silicon Valley Bank (SVB).
In response, NTV first argues that the Agreement could be read to mean that all NTV had to do was “introduce” potential investors to the deal, i.e., let them know it was out there; it did not have to actually introduce them to Lightship. On this proposed interpretation, sending a brief email very broadly describing the deal to 28 firms fulfilled its obligation. The court does not find that this is a reasonable interpretation of the Agreement. The Agreement contemplated that NTV would find at least 10 qualified sources of capital sufficiently interested in the opportunity that they would want to meet with the principals of Lightship, i.e., be introduced to Lightship. Clearly, sending a cold email to investors, most of whom did not even respond, was not what the parties understood would be sufficient to earn $ 330,000. Moreover, sending a follow-up email that attached a power point providing some additional information, but still without identifying as the target, was also inadequate.
As to the three investors, in dispute: Vector, Princeton, and SVB, Lightship argues that: (i) Stifel had already contacted Vector when it was still acting as Lightship’s investment banker;
(ii) Princeton was not an acceptable source of capital because one if its managers had sought to oust Plunkett as CEO of a decade earlier; and (iii) SVB could not be introduced to this transaction because SVB was’s banker when it was an independent company and Plunkett had already discussed the deal with SVB. The court finds these arguments insufficient to support dismissal of this claim by summary judgment. If Vector and SVB had previously passed on the transaction, but were willing to re-engage because of NTV’s efforts, a jury could find that they were introduced, or at least ready and willing to be introduced, to Lighthouse regarding their possible participation in the acquisition within the meaning of the Agreement. As to Princeton, there is evidence in the summary judgment record that Plunkett approved either directly or by inference this firm as an acceptable source of capital when it reviewed the original list of 28 firms to which NTV sent its initial email describing the transaction. The jury could also choose not to believe Plunkett regarding his reason for not meeting with Princeton or find that reason insufficient under the Agreement. While it may be that the literal terms of the Agreement have not been fulfilled if Plunkett or other members of team never met with these three firms; however, a breach of the covenant of good faith and fair dealing might be might be demonstrated with evidence that Plunkett avoided meeting with potential investors who NTV had contacted and developed to the point that they wanted to engage with the team to discuss the acquisition.
Additionally, there is evidence that at one point the $ 330,000 advisory fee was included in a spread sheet generated by Lighthouse as a transaction expense to be paid at closing. This is certainly not conclusive evidence that the fee was due, as there are other explanations as to why it might be included in an early draft of a closing document. It is, nonetheless, some evidence that Lighthouse believed that NTV had earned this fee.
Accordingly, summary judgment is denied with respect to so much of Counts I, II and VI as are based on a failure to pay the advisory fee.2 NTV’s motion for summary judgment on this claim is also denied, as NTV has only shown that there are disputed issues of fact material to the claim, not that it is entitled to judgment as a matter of law.
NTV alleges a claim for Deceit/Negligent Misrepresentation in Count V. The only allegedly false statement identified in the complaint with any specificity is that Lighthouse represented to NTV that it had an agreement with IBM that gave it an exclusive right to negotiate a purchase of, but failed to tell NTV that the agreement had expired. Even if this allegation were true, the summary judgment record establishes that IBM continued to negotiate the terms of the purchase with Lighthouse and its equity partner HIG through the end of 2015, closing the transaction on December 31, 2015. This is not a case in which NTV was misled into expending substantial resources in assisting Lighthouse only to have IBM sell to another buyer. A necessary element of a claim of deceit is damages, and NTV has not alleged that it suffered any damage in reliance on this allegedly material misrepresentation. See Kilroy v. Barron, 326 Mass. 464, 465 (1950) (plaintiff must have relied upon the representation as true and “acted upon it to its damage.”)
Remaining Claims
In its opposition to the defendant’s motion for summary judgment, NTV raises no argument in support of its claims for promissory estoppel, unjust enrichment, fraudulent transfer, or its claims to reach and apply debt or other interests due either defendant from some other
2 Count VI alleges the violation of Chapter 93A. The court finds this claim to be quite weak. Nonetheless, there exist circumstances in which a breach of the covenant of good faith and fair dealing will support a Chapter 93A claim and it therefore declines to dismiss this Count to the extent it is related to the advisory fee. See, e.g., Massachusetts Employers Ins. Exchange v. Propac-Mass., Inc., 420 Mass. 39 (1995).
third-party, not named as a defendant in this action, nor could it. Those claims are dismissed.
For the foregoing reasons, the defendants’ motion for summary judgment is ALLOWED, in part, and DENIED, in part, as follows: all Counts of the complaint are dismissed except so much of Counts I, II and VI as allege claims based upon Lighthouse’s refusal to pay the advisory fee. Plaintiff’s motion for summary judgment is DENIED.
Mitchell H. Kaplan
Justice of the Superior Court
Dated: May 31, 2017 read more


Posted by Massachusetts Legal Resources - July 4, 2017 at 8:51 am

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Oxford Global Resources, LLC v. Hernandez (Lawyers Weekly No. 12-065-17)

Oxford Global Resources, LLC, is a recruiting and staffing company that places individual contractors who have specialized technical expertise with businesses who need workers having such skills. Oxford hired Jeremy Hernandez to work in its Campbell, California, office. To accept Oxford’s offer Hernandez had to and did sign an offer letter and a separate “protective covenants agreement” (the “Agreement”) that contains confidentiality, non-competition, and non-solicitation provisions. The Agreement provides that it is governed by Massachusetts law and that any suit arising from or relating to that contract must be brought in Massachusetts.
Oxford alleges that Hernandez breached the Agreement by using information regarding the identity of Oxford’s customers to solicit those customers on behalf of a competitor in California. Hernandez has moved to dismiss this action under the forum non conveniens doctrine, arguing that this action should be heard in California, where he lives and worked for Oxford.
The Court concludes that the forum selection clause is unenforceable and that the interests of justice require that this case be heard in California. The Court will therefore ALLOW the motion to dismiss pursuant to G.L. c. 223A, § 5, and the common law doctrine known as forum non conveniens.
1. Enforceability of the Forum Selection Clause.
1.1. California Law Governs the Agreement. Whether Massachusetts courts will enforce a forum selection clause like the one agreed to by Hernandez must be decided under whatever law governs the contract as a whole. See Melia v. Zenhire, Inc., 462 Mass. 164, 168 (2012); Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 575 (1995). Thus, before deciding whether the Agreement’s mandatory forum selection clause is enforceable the Court must decide which State’s law governs this
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contract.1 Although the Agreement specifies that it is governed by Massachusetts law, the Court concludes that choice-of-law provision is unenforceable and that the contract is instead governed by California law.
“A choice-of-law clause should not be upheld where,” as here, “the party resisting it did not have a meaningful choice at the time of negotiation — i.e., where the parties had unequal bargaining power, and the party now attempting to enforce the choice-of-law clause essentially forced the clause upon the weaker party,” and enforcing the clause would be unfair to the weaker party. Taylor v. Eastern Connection Operating, Inc., 465 Mass. 191, 195 n.8 (2013). This follows from the general rule that contracts of adhesion are not enforceable if “they are unconscionable, offend public policy, or are shown to be unfair in the particular circumstances.” McInnes v. LPL Fin., LLC, 466 Mass. 256, 266 (2013), quoting Chase Commercial Corp. v. Owen, 32 Mass. App. Ct. 248, 253 (1992); accord Sonic-Calabasas A, Inc. v. Moreno, 311 P.3d 184, 202-203 (Cal. 2013). As the American Law Institute has explained:
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. A factor which the forum may consider is whether the choice-of-law provision is contained in an “adhesion” contract, namely one
1 The Court concludes and the parties seem to agree that the provision stating that the Agreement will be governed by Massachusetts law and that all actions relating to or arising out of the Agreement “will be submitted” to a court in Massachusetts is a mandatory forum selection clause that requires such contract claims to be tried in Massachusetts. Although the contract does not expressly state that jurisdiction in Massachusetts is exclusive or that such suits may not be brought elsewhere, the combination of the “will be submitted” language with a choice of law clause stating that Massachusetts law shall govern the contract has the effect of making Massachusetts the “mandatory and exclusive” venue. See Baby Furniture Warehouse Store, Inc., v. Meubles D & F Ltée, 75 Mass. App. Ct. 27, 31 (2009) (provision stating that contract is governed by Quebec law and that parties “agree to submit themselves to the jurisdiction of” Quebec courts for resolution of any disputes arising out of contract or parties’ relationship gave Quebec courts “exclusive jurisdiction over any disputes between the parties”); accord Boland v. George S. May Intern. Co., 81 Mass. App. Ct. 817, 826 n.12 (2012) (dictum).
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that is drafted unilaterally by the dominant party and then presented on a “take-it-or-leave-it” basis to the weaker party who has no real opportunity to bargain about its terms. Such contracts are usually prepared in printed form, and frequently at least some of their provisions are in extremely small print. Common examples are tickets of various kinds and insurance policies. Choice-of-law provisions contained in such contracts are usually respected. Nevertheless, the forum will scrutinize such contracts with care and will refuse to apply any choice-of-law provision they may contain if to do so would result in substantial injustice to the adherent.
Restatement (Second) of Conflict of Laws § 187 comment b (1971) (emphasis added).
It is apparent that the Agreement is a contract of adhesion and that Hernandez had neither the opportunity nor the bargaining power to negotiate over whether California or Massachusetts law would govern his non-competition, non-solicitation, and confidentiality agreements. The complaint specifically alleges that Oxford would not have hired Hernandez if he did not sign the Agreement, which makes clear that Hernandez had no opportunity to negotiate these issues. Oxford has neither alleged nor proffered any evidence suggesting that the parties had any negotiation over the choice of law or forum selection provisions contained in § 6.3 of the Agreement, or even that Oxford expressed any willingness to discuss those issues. The complaint also reveals that Hernandez had no bargaining power with respect to these issues. The complaint and its attachments indicate that Hernandez was hired to work as an entry-level employee. Oxford agreed to pay Hernandez $ 50,000 per year to work as an “account manager,” and alleges that Hernandez “had no previous experience or skill in the information technology staffing and consulting industry.” The only fair inference from the facts alleged by Oxford in its complaint is that Hernandez had no power to bargain over the combined choice-of-law and forum selection provision.
Oxford notes that § 7.5 of the Agreement states that Hernandez, by signing the contract, acknowledged that he had the opportunity to read the Agreement and to ask his own lawyer to review it, that he understood each provision, and that he was not under duress. But that boilerplate language cannot change the apparent facts that Hernandez had no bargaining power with respect to the choice-of-law and forum selection clauses in Oxford’s standard form contract, and that the Agreement signed by Hernandez was not the product of any negotiations between the parties.
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It is also apparent that the choice-of-law provision was an attempt by Oxford to circumvent California’s strong public policy against the enforceability of non-competition agreement. If the Agreement did not contain a choice of law provision, then California law would govern Oxford’s claims under the Agreement because California “has the most significant relationship to the transaction and the parties.” Bushkin Associates, Inc. v. Raytheon Co., 393 Mass. 622, 632 (1985); accord, e.g., Nile v. Nile, 432 Mass. 390, 401 (2000); OneBeacon America Ins. Co. v. Narragansett Elec. Co., 90 Mass. App. Ct. 123, 128 (2016). It is undisputed that Hernandez was a California resident who was recruited and hired by Oxford in California, to work in Oxford’s California office, and to service only California clients. Although Oxford says its principal place of business is in Massachusetts, Oxford has alleged no facts and presented no evidence suggesting that Hernandez’s contract with and work for Oxford implicated Massachusetts in any way.
Non-competition agreements like the one that Oxford required Hernandez to sign are not enforceable under California law. See Cal. Bus. & Prof. Code § 16600 (“every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”). This statute codifies “California’s strong public policy against noncompetition agreements.” Advanced Bionics Corp. v. Medtronic, Inc., 59 P.3d 231, 236-237 (Cal. 2002). Even before the passage of § 1660, “it has long been the public policy of [California] that ‘[a] former employee has the right to engage in a competitive business for himself and to enter into competition with his former employer, even for the business of … his former employer, provided such competition is fairly and legally conducted.’ ” Reeves v. Hanlon, 95 P.3d 513, 517 (Cal. 2004), quoting Continental Car–Na–Var Corp. v. Moseley, 148 P.2d 9, 13 (Cal. 1944).
Oxford’s argument that the Agreement does not violate California law, because it only bars Hernandez from competing by using confidential information that belongs to Oxford, is without merit. The Agreement provides that Hernandez may not compete against his former employer using Oxford’s trade secret information, but it defines the concept of confidential information so broadly that it includes the “identity” of Oxford’s customers, prospective customers, and consultants. And the
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complaint alleges that Hernandez breached the Agreement merely by soliciting companies and individuals that he knew where customers of or consultants placed by Oxford. The non-competition restriction that Oxford seeks to enforce therefore goes far beyond what is permitted under California law or, for that matter, under Massachusetts law.
An employee is free to carry away his own memory of customers’ names, needs, and habits and use that information, even to serve or to solicit business from those very customers. Such “remembered information” is not confidential because the information itself, as distinguished from an employer’s compilation of such information into a list or database, is known to the customers and thus not kept secret by the employer. American Window Cleaning Co. of Springfield, Mass. v. Cohen, 343 Mass. 195, 199 (1961); accord Angell Elevator Lock Co. v. Manning, 348 Mass. 623, 625 (1965); Woolley’s Laundry, 304 Mass. at 391-392; May v. Angoff, 272 Mass. 317, 320 (1930). The same is true under California law. See Retirement Group v. Galante, 176 Cal.App.4th 1226, 1239-1241, 98 Cal.Rptr.3d 585, 594-596 (Cal. App. Ct. 2009).
Since the mere identity of customers is not confidential, the Agreement that Oxford seeks to enforce is the kind of non-competition agreement that is void under California law. Dowell v. Biosense Webster, Inc., 179 Cal.App.4th 564, 577-579, 102 Cal.Rptr.3d 1, 11-12 (Cal. App. Ct. 2009); Galante, supra.
In sum, the Agreement’s choice-of-law provision is not enforceable because it would result in substantial injustice to Hernandez by depriving him of the freedom to compete against Oxford in California that is guaranteed under California law, and it would do so based solely on a contract clause that Hernandez had no meaningful opportunity to negotiate when he was hired. See Taylor, 465 Mass. at 195 n.8. For the reasons discussed above, the Agreement is therefore governed by California law.
1.2. The Forum Selection Clause is Not Enforceable. The mandatory forum selection clause is unenforceable for much the same reasons.
Forum selection clauses are generally enforceable under California law “in the absence of a showing that enforcement of such a clause would be unreasonable.” Smith, Valentino & Smith, Inc. v. Superior Court, 551 P.2d 1206, 1209 (Cal. 1976). The mere fact that such a clause was part of a contract of adhesion, rather than the
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result of meaningful negotiation between the parties, does not render the provision unenforceable under California law. See Cal-State Business Prods. & Servs., inc. v. Ricoh, 12 Cal.App.4th 1666, 1679-1681, 16 Cal.Rptr.2d 417, 425-426 (Cal. Ct. App. 1993). “A mandatory forum selection clause … is generally given effect unless enforcement would be unreasonable or unfair,” even if it is made part of an employment agreement. Verdugo v. Alliantgroup, L.P., 237 Cal.App.4th 141, 147, 187 Cal.Rptr.3d 613, 618 (Cal. Ct. App. 2015).
However, where a forum selection clause is combined with a choice-of-law provision that would bar a claim or defense in violation of California public policy, the forum selection provision is also “unenforceable as against public policy.” See Verdugo, 237 Cal.App.4th at 154-157, 187 Cal.Rptr.3d at 624-625; accord Hall v. Superior Court, 150 Cal.App.3d 411, 413, 197 Cal.Rptr. 757, 759 (Cal. Ct. App. 1983).2
Since Oxford was hiring Hernandez to work for it in California, the evident reason why Oxford sought to make the Agreement subject to Massachusetts law and require that any lawsuits arising from the contract be brought in Massachusetts was that Oxford wanted to keep Hernandez from enforcing his rights under California law not to be subject to a broad non-competition agreement that barred any solicitation of Oxford’s former or prospective customers. Under these circumstances, the forum selection clause in the Agreement is not enforceable under California law.
2. Analysis of Proper Venue. In the absence of an enforceable forum selection clause, a plaintiff’s decision to bring suit in a permissible venue should be respected unless an adequate alternative forum is available and the relevant private and public interests strongly favor litigating the case elsewhere. Gianocostas v. Interface Group-Massachusetts, Inc., 450 Mass. 715, 723 (2008). “In general terms, the doctrine of
2 These holdings by the California courts are not idiosyncratic. For example, the United States Supreme Court has noted with respect to mandatory arbitration clauses that “in the event the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party’s right to pursue statutory remedies for antitrust violations, we would have little hesitation in condemning the agreement as against public policy.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n.19 (1985); see also M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (“A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.”) (dictum).
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forum non conveniens provides that, ‘where in a broad sense the ends of justice strongly indicate that the controversy may be more suitably tried elsewhere, then jurisdiction should be declined and the parties relegated to relief to be sought in another forum.’ ” Id., quoting Universal Adjustment Corp. v. Midland Bank, Ltd., 281 Mass. 303, 313 (1933). Thus, “dismissal may be appropriate ‘[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum.’ ” Id., quoting G.L. c. 223A, § 5. “Decisions to grant or deny motions to dismiss on the ground of forum non conveniens are left to the discretion of the trial judge.” Id.
The Court concludes, in the exercise of its discretion, that it would be unfair to compel Hernandez to defend himself in Massachusetts and that justice would best be served by dismissing this action so it may be tried in California.
State courts in California provide an adequate alternative forum. They are just as capable of hearing this matter and deciding it fairly. Oxford does not contest this point. The choice-of-law issues discussed above have no bearing on whether this case should be tried in Massachusetts or California. Cf. Melia, 462 Mass. at 173-182. Thus, the Court’s determination that California law bars or at least limits Oxford’s contract claims is irrelevant when deciding Hernandez’s motion to dismiss on grounds of forum non conveniens. If California law applies and limits Oxford’s claims, that will be true whether this matter is tried in California or Massachusetts courts.
In weighing the relevant private and public interests, the Court must take into account the fact that all relevant events occurred in California and all of Oxford’s alleged harm or injury was incurred there. The Court credits Hernandez’s unchallenged testimony (by way of affidavit) that he interviewed for the Oxford job in California, signed the offer letter and Agreement in California, was trained by Oxford in California, did all of his work for Oxford in California, and reported to Oxford supervisors who were located in California. The Court also finds that all of the Oxford clients (which are the companies that hire Oxford to recruit and place technically skilled personnel) and consultants (who are the people Oxford places with its clients) with whom Hernandez worked were located in California. The Court further finds that Hernandez still lives and works in California, that all of the individuals whom Oxford accuses Hernandez of soliciting for his new employer are
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located in California, and that none of the conduct that Oxford accuses Hernandez of engaging in took place in Massachusetts or anywhere else outside of California.
As a result, the relevant private interests weigh heavily in favor of litigating this case in California. Since everything relevant to this case happened in California, it appears that all relevant witnesses are located in California and cannot be compelled to testify in Massachusetts. All other relevant evidence is presumably either located in California or available electronically so that it has no bearing on which forum is more convenient. It will be easier and more efficient for both Hernandez and Oxford to try this case in California. Indeed, Hernandez will be unable adequately to defend himself unless the case is litigated in California. And if Oxford were to obtain a judgment against Hernandez it would be much easier to enforce it if issued by a California court. The private interests strongly favor trial in California. Cf. Gianocostas, 450 Mass. at 726-727.
With respect to the relevant public interests, California has a much stronger interest than Massachusetts in deciding whether Hernandez breached his contract or committed a tort in trying to convince some of Oxford’s customers or consultants in California to use a competitor instead. Hernandez has been a California resident since before he first started working for Oxford in California. And the business operations that Oxford claims were unlawfully harmed are located in California and serve California customers. Massachusetts has very little interest in the outcome of this lawsuit. Thus, the public interests also strongly favor trial in California.
For all of these reasons, the Court concludes that California is the appropriate forum in which to litigate Oxford’s claims against Hernandez.
Defendant’s motion to dismiss this action on grounds of forum non conveniens is ALLOWED. Final judgment shall enter dismissing all claims without prejudice.
June 9, 2017
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - June 14, 2017 at 4:34 pm

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H.P. Hood LLC v. Allianz Global Risks US Insurance Company (Lawyers Weekly No. 11-173-15)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030;

14-P-1605                                       Appeals Court


No. 14-P-1605.

Suffolk.     September 2, 2015. – November 2, 2015.

Present:  Meade, Wolohojian, & Milkey, JJ.

Contract, Insurance.  Insurance, “All risk” policy, Construction of policy, Coverage, Property damage.  Practice, Civil, Summary judgment.

Civil action commenced in the Superior Court Department on November 5, 2010.

The case was heard by Christine M. Roach, J., on motions for summary judgment. read more


Posted by Massachusetts Legal Resources - November 2, 2015 at 3:46 pm

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Celebrate Global Smurfs Day (Sponsored)

Global Smurfs Day.

By Kathleen Miller

The world is about to get a whole lot smurfier. Ambassadors from 28 countries are painting the town blue today as they kick off the second-annual Global Smurfs Day by spreading that irrepressible smurfy cheer through the streets of Paris.

The celebration honors Smurfs creator Pierre “Peyo” Culliford’s June 25 birthday and the opening of ‘The Smurfs 2’ on July 31. Culliford’s daughter, Veronique, presided over a ceremony in her father’s hometown of Belgium at the site of a giant Smurf statue. She officially appointed more than 40 Smurfs ambassadors who then boarded a train to Paris, where the movie is set, where they spread smiles and heralded the movie’s opening.

Events are taking place around the world, and in Los Angeles, families can join Smurfs at local appearances where they will play the Ubisoft video game, and sample Menchie’s Smurfberry frozen yogurt, among other activities. Families are encouraged to enjoy nature by the U.S. Forest Service and Ad Council’s Discover the Forest campaign, and can watch the first “The Smurfs” film at an outdoor evening screening.   read more


Posted by Massachusetts Legal Resources - June 22, 2013 at 2:20 pm

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Five Things: Girls Hoops, Food Choices and Global Warming

The 2012-2013 Lexington High girls varsity basketball team.

1. LHS Girls Hoops Host Boston Latin: Lexington High varsity girls basketball team will look to punctuate a successful 2012-2013 campaign with a postseason run and it begins at 7 p.m. tonight, when the Minutemen host Boston Latin in the first round to the MIAA Division 1 North tournament.

2. Today in Public Meetings: According to the town website, public meetings posted for today include the ad hoc Townwide Facilities Master Planning Committee at 8:30 a.m. at the DPW Building, the Town Celebrations Committee at 7 p.m. at the DPW Buildig, the Tourism Committee’s Antony Working Group at 7 p.m. at Cary Hall, the Recreation Committee at 7 p.m. at the Town Office Building and the Planning Board at 7:30 p.m. at the Town Office Building.

3. Food Choices & Global Warming with Sonia DeMarta: Basektball’s not the only thing going tonight at Lexington High. At 7 p.m., Lexington Community Education will present an evening of discussion on food choices and global warming with Sonia DeMarta, a co-founder of the Lexington Farmers Market. Costs $ 20; email info@­lexingto­ncommunityed.­org for more information. read more


Posted by Massachusetts Legal Resources - February 27, 2013 at 1:38 pm

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