Posts tagged "Inc."

Dental Service of Massachusetts, Inc. v. Commissioner of Revenue (Lawyers Weekly No. 10-059-18)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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;



Suffolk.     December 5, 2017. – April 13, 2018.

Present:  Gants, C.J., Gaziano, Lowy, Budd, & Cypher, JJ.

Taxation, Abatement, Insurance company, Excise.  Practice, Civil, Abatement.  Insurance, Health and accident, Group, Coverage.  Statute, Construction.  Words, “Covered persons.”

Appeal from a decision of the Appellate Tax Board.

The Supreme Judicial Court granted an application for direct appellate review. read more


Posted by Massachusetts Legal Resources - April 14, 2018 at 1:21 am

Categories: News   Tags: , , , , , , , ,

America’s Test Kitchen Inc. v. Kimball, et al. (Lawyers Weekly No. 09-033-18)

AMERICA’S TEST KITCHEN INC., as the Sole General Partner of America’s Test Kitchen Limited Partnership
Christopher Kimball, Melissa Baldino, Christine Gordon, and Deborah Broide used to work for America’s Test Kitchen on a television cooking show and on related programming and publications distributed through various media. This lawsuit concerns and arises from their development of a competing business. ATK brought suit first. Kimball and CPK Media, LLC, asserted counterclaims. The Court will refer to America’s Test Kitchen, Inc., and America’s Test Kitchen Limited Partnership as the “ATK Parties” and to Defendants as the “CPK Media Parties.”
The parties have filed cross-motions to compel the production of documents withheld under a claim of privilege or litigation work product. The party asserting that a particular set of documents is protected from disclosure by the attorney-client privilege or the work product doctrine has the burden of proving that contention. See Commissioner of Revenue v. Comcast, 453 Mass. 293, 304 & 315 (2009); Hanover Ins. Co. v. Rapo & Jepsen Ins. Services, Inc., 449 Mass. 609, 619-620 (2007).
The Court will allow the ATK Parties’ motion to the extent that it seeks production of any disputed communications with Matthew Sutton or those disputed communications with William Thorndike that are not protected by the work product doctrine. It will deny the ATK Parties’ motion to the extent that it seeks production of protected work product in communications with Thorndike, or the production of any disputed communications with Melissa Baldino or Thomas Hagopian. And it will deny the CPK Media Parties’ motion in its entirety, as to communications with ATK’s public relations consultants, with its lawyers, or among its board members.
1 CPK Media, LLC; Melissa Baldino; Christine Gordon; Deborah Broide; CPK Holdco, LLC; and William Thorndike.
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1. The ATK Parties’ Motion to Compel.
1.1. Matthew Sutton. The CPK Media Parties have withheld communications with Mr. Sutton regarding legal advice sought by or provided to CPK Media LLC on the ground that those communications are protected by the attorney-client privilege. They argue that (i) this privilege protects confidential communications that share legal advice with a client’s employee who is needed to understand or implement that advice, or that concern information known to the employee that is needed to inform or formulate requests for legal advice; (ii) the same is true regarding similar communications with someone who is the functional equivalent of an employee; (iii) Sutton was the functional equivalent of an employee of CPK Media LLC and was involved in seeking and making sense of legal advice for CPK Media; and (iv) therefore the attorney-client privilege applies just as if Sutton were a CPK Media employee with a similar involvement in obtaining and implementing legal advice.
The Court agrees with the legal premises of this argument. But the CPK Media Parties have not shown that Sutton was the functional equivalent of an employee who could share or participate in communications about legal advice without thereby waiving any otherwise applicable privilege.
The attorney-client privilege “protects communications between a client and an attorney that are made in confidence for the purpose of giving or obtaining legal advice.” McCarthy v. Slade Assocs., Inc., 463 Mass. 181, 190 (2012). It therefore covers confidential communications conveying legal advice from attorney to client as well as confidential communications conveying questions or information from client to attorney in order to obtain legal advice. Id. n.21.
In addition, this privilege also protects other “confidential communications made for the purposes of obtaining or providing professional legal services,” including such communications between parties that are “involved in a joint defense,” “between representatives of the client[,] or between the client and a representative of the client.” Mass. Guide Evid. § 502(b); accord Hanover Ins., 449 Mass. at 614-617 (privilege covers confidential communications among parties involved in joint defense
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or sharing other common interest in legal matter, just as it covers such communications with or among a client’s necessary agents).
In the context of a corporate client, the attorney-client privilege protects communications that gather or convey information from knowledgeable employees or agents that is needed by counsel in formulating legal advice, as well as communications that relay legal advice obtained from an attorney to employees or other agents of the client who must understand and help to implement that advice. See generally RFF Family Partnership, LP v. Burns & Levinson, LLP, 465 Mass. 702, 708 (2013); Upjohn Co. v. United States, 449 U.S. 383, 389-396 (1981). After all, since a corporate entity like CPK Media LLC “is not a living person, it can act only through its agents.” Commonwealth v. Angelo Todesca Corp., 446 Mass. 128, 135 (2006).
Where an outside consultant to a business is the functional equivalent of an employee, and plays a “pivotal role” in matters as to which the business obtains legal advice from an attorney, the attorney-client privilege protecting communications between the business and its counsel is not lost merely because the consultant is involved in, copied on, or becomes privy to those communications. See One Legemont LLC v. Town of Lexington Zoning Bd. of Appeals, no. 13-PS-477585(GHP), 2014 WL 2854788, at *2-*4 (Mass. Land Ct. 2014) (Piper, J.); accord, e.g., United States v. Graf, 610 F.3d 1148, 1158-1159 (9th Cir. 2010); Federal Trade Comm’n v. GlaxoSmithKline, 294 F.3d 141, 147-148 (D.C. Cir. 2002); In re Bieter Co., 16 F.3d 929, 936-940 (8th Cir. 1994); Alliance Const. Solutions, Inc. v. Department of Corrections, 54 P.3d 861, 867-870 (Colo. 2002).
This necessarily follows from the general principle that the privilege encompasses confidential communications “made to or shared with necessary agents of the attorney or the client.” Hanover Ins., 449 Mass. at 616.
This “functional equivalent doctrine” does not, however, encompass all outside consultants. Where the consultant’s “relationship with the company is one the non-employee has with many other clients or customers; is single-purpose and limited in scope, duration, and responsibility; or does not put the non-employee in a high-level, trusted decision-making or guiding role, equivalent to that of an employee, the non-
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employee does not hold the status necessary to keep communications involving him or her privileged.” One Legemont, 2014 WL 2854788, at *4.
Nor does this doctrine mean that all communications regarding legal advice with consultants who perform functions similar to employees will be privileged. Even if a consultant is the functional equivalent of an employee for some purposes, distribution of legal advice or other attorney-client communications to the consultant will only be privileged if the client needed the consultant to help facilitate the rendition of legal advice by the lawyer or the implementation of that advice by the client. GlaxoSmithKline, 294 F.3d at 147; In re Copper Market Antitrust Litigation, 200 F.R.D. 213, 219 (S.D.N.Y. 2001). If otherwise privileged communications are shared willy-nilly among the client’s employees or functionally equivalent agents, even though their participation is not necessary to obtain or implement legal advice from an attorney, the privilege will be lost. See Commonwealth v. Senior, 433 Mass. 453, 457 (2001) (“the privilege is destroyed when such communications are made in the presence of a non-necessary agent of the attorney or client”).
The CPK Media Parties have not established that Sutton was the functional equivalent of a CPK Media employee who could share in attorney-client communications on a privileged basis. The evidence presented to the Court shows only that in the Fall of 2016 Sutton advised Kimball to consult with a lawyer and recommended particular lawyers to him, and that from February 2016 to February 2017 Sutton was paid by CPK Media for serving as an “independent advisor” to the company. That is not enough to establish that CPK Media needed to gather information from Sutton in order to obtain legal advice, that CPK Media had some need to share confidential legal advice with Sutton, or that Sutton was a necessary agent in seeking or implementing legal advice for any other reason. The mere fact that Sutton directed Kimball and CPK Media to a particular lawyer and law firm does not mean that his communications about that legal representation are protected by the attorney-client privilege.
As a result, voluntary disclosure to Mr. Sutton of what otherwise would have been privileged attorney-client communications, or of any asserted attorney work
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product, would constitute a waiver of that privilege. See In re Adoption of Sherry, 435 Mass. 331, 336 (2001).
1.2. William Thorndike. The CPK Media Parties argue that they need not produce communications between Mr. Thorndike and Mr. Kimball regarding legal advice that had been provided to Kimball and CPK Media LLC, whether or not any lawyer representing CPK Media was directly involved in the communication. All of the contested communications with Thorndike have been withheld on the ground that they are protected by the attorney-client privilege under the so-called “common interest” doctrine. Some have also been withheld on the additional ground that they contain protected litigation work product. The Court concludes that the CPK Media Parties may only withhold the disputed Thorndike documents to the extent that they contain protected work product.
1.2.1. The Common Interest Doctrine. The CPK Media Parties have not shown that the sharing with Thorndike of otherwise privileged legal advice received by Kimball or CPK Media LLC constituted a protected attorney-client communication under the common interest doctrine.
The Supreme Judicial Court has adopted “as the law of the Commonwealth” the common interest doctrine as set forth in Restatement (Third) of the Law Governing Lawyers § 76(1) (2000). See Hanover Ins., 449 Mass. at 617. This doctrine provides that “[i]f two or more clients” have “a common interest” in any legal matter (involving litigation or otherwise), “are represented by separate lawyers,” and “agree to exchange information concerning the matter,” then communications among those clients or their lawyers are protected by the attorney-client privilege “as against third persons.” Id. at 614, quoting Restatement § 76(1). Existence of Common Legal Interests. The Court is satisfied that Thorndike, Kimball, and CPK Media shared sufficiently common legal interests during the relevant period from late 2015 through 2016.
ATK’s lawyer sent a threatening letter to Kimball’s lawyer on November 16, 2015. The letter threatened suit against Kimball “and any persons backing him financially or otherwise” if Kimball were to compete against ATK in any manner. The letter not only warned against any use of ATK’s intellectual property or
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interference with ATK’s advantageous relationships, but asserted even more broadly that “any attempt” by Kimball “to compete with” ATK would constitute an unlawful “theft of corporate opportunities.”
The Court finds that Thorndike, Kimball, and CPK Media LLC had a common legal interest in protecting themselves against ATK’s threatened claims. Thorndike, who was backing Kimball and later invested in his new company, would reasonably have understood that his interests in the threatened litigation were closely aligned with those of Kimball and CPK Media. Cf. Hanover Ins., supra, at 619 (common interest requirement is easily met where parties are engaged in “a joint effort to establish a common litigation defense strategy”). Indeed, the ATK Parties later named Thorndike as a defendant in this lawsuit, alleging that he participating in the misappropriation of trade secrets and unfairly helped use them to compete in violation of G.L. c. 93A.
The ATK Parties’ assertion that the common interest doctrine does not apply unless different parties’ legal interests are “identical” is without merit. The SJC has rejected that argument, holding that the interests of the different clients need not be “identical” or “entirely congruent” for this doctrine to apply. Hanover Ins., 449 Mass. at 618, quoting Restatement § 76(1) comment e. It explained that since different clients “rarely will have identical interests,” imposing such a requirement “would ‘stifle[] the free flow of communication that the attorney-client privilege is intended to promote.’ ” Id., quoting K.T. Schaffzin, An Uncertain Privilege: Why the Common Interest Doctrine Does Not Work and How Uniformity Can Fix It, 15 B.U. Pub. Int. L. J. 49, 73 (2005). Two parties should be deemed to share a common legal interest for purposes of applying this privilege where their legal concerns or positions are sufficiently well aligned that they may reasonably “attempt to promote that interest by sharing a privileged communication.” Id. at 618-619, quoting Schaffzin, supra. Absence of Legal Representation. Nonetheless, the common interest doctrine does not apply here because Thorndike was not represented by separate counsel. The lawyers representing CPK Media and Kimball were not representing Thorndike. Although Thorndike invested in and is a member of CPK Media LLC, he plays no management role in the company as a board member,
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managing member, or otherwise. And there is no evidence that Thorndike had his own lawyer. As a result there is no proof that Thorndike was communicating with Kimball and others about legal matters as part of Thorndike’s own efforts to obtain or follow legal advice.2
“A person who is not represented by a lawyer and who is not himself or herself a lawyer cannot participate in a common-interest arrangement” and thereby invoke the attorney-client privilege. See Restatement (Third) of the Law Governing Lawyers§ 76(1), comment d. That is because “the common interest doctrine depends entirely on” and exists only to protect “communications that fall within the attorney-client privilege.” See Hanover Ins., 449 Mass. at 618. It “does not create a new or separate privilege;” its only function is to “prevent[] waiver of the attorney-client privilege when otherwise privileged communications are disclosed to and shared, in confidence, with an attorney for a third person having a common legal interest for the purpose of rendering legal advice to the client.” Id. at 614. As a result, the doctrine does not protect communications about shared legal interests with parties who are not represented by counsel.
“Under the strict confines of the common-interest doctrine,” therefore, the fact that Thorndike was not represented by counsel “vitiates any claim to a privilege.” Cavallaro v. United States, 153 F. Supp. 2d 52, 61 (D. Mass. 2001) (Saris, J.), aff’d on other grounds, 284 F.3d 236 (1st Cir. 2002) (where parents and their counsel met with children about shared legal problems, but children were not represented by counsel, common interest doctrine did not apply and discussions were not privileged).
1.2.2. Work Product Shared with Thorndike. The CPK Media Parties also claim that some of the disputed communications with Mr. Thorndike are exempt from disclosure because they contain protected work product. The Court
2 The CPK Media Parties argue that “ATK merely offers conjecture” as “it does not know who the identified attorneys represent, nor what legal advice was being conveyed.” That is an improper attempt to shift the burden of proof. The CPK Media Parties, as the party asserting that these documents are protected by the attorney-client privilege, “has the burden to show that the privilege applies.” See Hanover Ins., 449 Mass. at 619.
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agrees. It also finds that these protections were not waived when Kimball or CPK Media shared this work product with Thorndike.
The work product doctrine exempts from discovery things that were prepared “in anticipation of litigation or for trial” by or for an opposing party. See Mass. R. Civ. P. 26(b)(3). A document or other work product is created “in anticipation of litigation” if it was “prepared ‘because of’ existing or expected litigation.” See Comcast, 453 Mass. at 316–317, quoting and adopted the holding of United States v. Adlman, 134 F.3d 1194, 1198 (2d Cir.1998) (“Adlman II”). Under this test, a document created because of threatened or actual litigation constitutes protected work product even if it was not created to assist in the litigation itself. Id. The protection afforded work product “is qualified, and can be overcome if the party seeking discovery demonstrates ‘substantial need of the materials’ and that it is ‘unable without undue hardship to obtain the substantial equivalent of the materials by other means.’ ” Comcast, 45 Mass. at 314, quoting Rule 26(b)(3).3
The communications with Thorndike that are claimed to contain protected work product were all created after ATK threatened legal action against Kimball and anyone working with him. The Court finds that at least from that point on the CPK Media Parties could reasonably anticipate litigation, and thus any materials created because of those threats or the possibility of litigation with the ATK Parties constitute protected work product. The ATK Parties have not shown that they have a substantial need for any of the disputed work product.
Although the disclosure of confidential attorney-client communications to Thorndike waived any attorney-client privilege, as discussed above, it does not follow that the sharing of work product created in anticipation of litigation with Thorndike
3 There is an exception to this exception that is not relevant here. If the party seeking production makes such a showing, the court must still “protect against disclosure of the mental impressions, conclusions, opinions or legal theories of an attorney or other representative of a party concerning the litigation.” Rule 26(b)(3). As a result, such “so-called ‘opinion’ work product is afforded greater protection than ‘fact’ work product.” Comcast, supra. The SJC has “yet to decide whether the protection of opinion work product is absolute, … but ‘at a minimum … a highly persuasive showing’ is needed to justify the disclosure of opinion work product.” DaRosa v. City of New Bedford, 471 Mass. 446, 459 (2015), quoting Adlman II, 134 F.3d at 1204; accord Comcast, 453 Mass. at 314-315.
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waives the protections of Rule 26(b)(3). “As a general rule, work product is more difficult to waive than attorney-client privilege.” Ace Am. Ins. Co. v. Riley Bros., no. 10-1252-C, 30 Mass. L. Rptr. 116, 2012 WL 3124620, at *5 (Mass. Super. Ct. 2012) (Liebensperger, J.). “The attorney-client privilege “is designed to protect confidentiality, so that any disclosure outside the magic circle is inconsistent with the privilege.” Bank of America, N.A. v. Deloitte & Touche LLP, 24 Mass. L. Rptr. 186, 2008 WL 2423265, at *2 (Mass. Super. Ct. 2008) (Gant, J.), quoting United States v. Massachusetts Institute of Technology, 129 F.3d 681, 687 (1st Cir. 1997). In contrast, “[t]he work product doctrine … is designed to protect work product from disclosure to ‘adversaries,’ so ‘only disclosing material in a way inconsistent with keeping it from an adversary waives work product protection.’ ” Bank of America, supra, quoting MIT, supra; accord, e.g., United States v. American Tel. & Tel. Co., 642 F.2d 1285, 1299 (D.C. Cir. 1980).
The Court finds that disclosure of work product to Mr. Thorndike did not waive the protections of Rule 26(b)(3). Thorndike is closely aligned with, and highly unlikely to become adverse to, the other CPK Media Parties. Disclosing CPK Media’s confidential litigation or pre-litigation plans or other work product to Thorndike carries little risk or likelihood that as a result that information will be shared with the ATK Parties or any other potential adversary.
For all of these reasons, the Court will not compel the CPK Media Parties to produce communications with Mr. Thorndike that contain or constitute protected work product. If only part of a disputed communication with Mr. Thorndike contains protected work product, the CPK Media Parties must redact that portion and produce the rest of the communication.
1.3. Melissa Baldino. The Court finds that communications among Ms. Baldino, Mr. Kimball, and the lawyers representing them both are privileged and need not be produce. For present purposes, the Court accepts the CPK Media Parties’ representation and offer of proof that the same counsel simultaneously represented Kimball, Baldino, and the company they were forming together. However, the Court hereby orders the CPK Media Parties to file an affidavit from Ms. Baldino confirming
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this representation by April 20, 2017. If they do not do so then the Court will entertain a motion to reconsider this part of its decision on that basis.
Plaintiff’s assertion that the privilege only protects communications that directly involve counsel, and therefore can never protect emails between Baldino and Kimball alone, is without merit. Where two clients are represented by the same lawyer, they may speak in confidence among themselves regarding what advice to seek from their lawyer or regarding what to do based on their lawyer’s legal advice. See Mass. Guide Evid. § 502; Restatement (Third) of the Law Governing Lawyers § 75 (2000). Since a single client may share privileged attorney-client communications with a necessary agent without thereby waiving the privilege, Hanover Ins., 449 Mass. at 616, it follows that two clients that have a common legal interest and have retained the same lawyer to represent them may engage in similar communications without waiving the privilege.
1.4. Thomas Hagopian. The Court finds that the CPK Media Parties have established that all of the disputed communications with Mr. Hagopian constituted protected work product. The ATK Parties seek to compel the production of certain emails with Hagopian between December 17 and December 20, 2015. Hagopian was working for Mr. Kimball or CPK Media at that time. The communications with Hagopian were created because of the November 2015 threat of litigation against Kimball and anyone working with him or financing his new venture. More specifically, Kimball was communicating with Hagopian to implement advice of counsel regarding the preservation or removal of documents in the possession of Kimball or Baldino. Since these communications with Hagopian were prepared in anticipation of litigation, they are protected from disclosure by the work product doctrine. The ATK Parties have made no showing that they have a substantial need for these documents.
2. The CPK Media Parties’ Motion to Compel.
2.1. Public Relations and Digital Media Venders. The ATK Parties have withheld their communications with two public relations firms. The Court finds that these documents were prepared because of this litigation and are therefore protected by the work product doctrine. The CPK Media Parties have not shown that they have
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a substantial need for these documents. The Court will therefore not order that these documents be produced.
The two public relations firms at issue here were hired by the ATK Parties’ litigation counsel to deal with matters arising from or otherwise relating to this lawsuit. Counsel hired Rasky Baerlein Strategic Communications to provide “crisis management communications services” and help the ATK Parties explain their litigating positions to the public. Counsel hired Liberty Concepts to provide similar services with respect to social media and other online platforms, and also to help gather potential evidence of brand confusion.
The Court finds that the disputed communications with Rasky and Liberty were all prepared because of the prospect of litigation and therefore constitute protected work product. The SJC has held that the work product doctrine protects documents prepared by an accounting firm to help a client “make an informed business decision” taking into account the risks of potential litigation. Comcast, 453 Mass. at 316–318. If documents concerning services to help a corporate entity prepare for the business or financial impact of potential litigation are protected work product, as in Comcast, then documents prepared to defend a business from attacks or other adverse publicity as a result of anticipated litigation are similarly protected. See Haugh v. Schroder Investment Mgmt. North Am., Inc., no. 02-Civ.795-DLC, 2003 WL 21998674, at *1 & *5 (S.D.N.Y. 2003).
The Court recognizes that some judges have held that the work product doctrine does not cover documents prepared by or exchanged with consultants hired to provide crisis communications and manage negative business consequences of litigation. See, e.g., In re Prograf Antitrust Litig., no. 1:11-md-02242-RWZ, 2013 WL 1868227, at *3 (D. Mass. 2013) (Zobel, J.) (documents regarding “standard public relations services related to … business or media fallout” of potential litigation were not protected work product because they had nothing to do with “the rendering of legal advice”); Egiazaryan v. Zalmayev, 290 F.R.D. 421, 436 (S.D.N.Y. 2013) (documents that “relate solely to public relations strategy and contain no discussion of legal strategy or attorney opinions or impressions” are not protected under work product doctrine); Burke v. Lakin Law Firm, PC, No. 07-CV-0076-MJR, 2008 WL
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117838, at *3 (S.D. Ill. 2008) (“though the work product doctrine may protect documents that were prepared for one’s defense in a court of law, it does not protect documents that were merely prepared for one’s defense in the court of public opinion”); Calvin Klein Trademark Trust v. Wachner, 198 F.R.D. 53, 55 (S.D.N.Y. 2000) (“public relations advice, even if it bears on anticipated litigation, falls outside the ambit of protection of the so-called ‘work product’ doctrine embodied in Rule 26(b)(3) … because the purpose of the rule is to provide a zone of privacy for strategizing about the conduct of litigation itself, not for strategizing about the effects of the litigation on the client’s customers, the media, or on the public generally”).
But those decisions are inconsistent with the SJC’s holding in Comcast. It does not matter whether the disputed communications with Rasky and Liberty contain or reveal any opinions of legal counsel or whether they were created to assist with the litigation itself, as distinguished from more general public relations efforts. So long as the documents were created because of the threat of litigation, which they were, they fall within the scope of the work product doctrine. See Comcast, 453 Mass. at 316–317. And since the CPK Media Parties have not met their burden of proving that they have a substantial need to obtain these documents, the Court must deny this part of their motion to compel.
2.2. Attorneys. The ATK Parties have withheld several hundred email communications with their lawyers on the ground that they constitute privileged attorney-client communication. The CPK Media Parties argue that the privilege log does not adequately demonstrate that these communications concerned legal advice, rather than purely business advice that would not be privileged. The Court disagrees.
As the ATK Parties correctly note, the descriptions they used in their log to justify withholding these documents on the ground of attorney-client privilege are quite similar to the CPK Media Parties’ own explanations in their logs of why documents are protected by the same privilege. A party claiming the attorney-client privilege need not disclose the substance of what legal advice was sought or provided. The whole point of the privilege is to keep the substance of the communication secret.
In any case, the Court accepts the representation at oral argument by the ATK Parties’ counsel that all of these communications concerned legal advice, and did not
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involve discussion of purely business issues. The Court therefore finds that the ATK Parties properly withheld these documents under the attorney-client privilege.
2.3. ATK Board Members. Finally, the Court finds that private email communications among America’s Test Kitchen board members regarding legal advice by counsel is protected by the attorney-client privilege, even if no lawyer was copied on the email. As noted above, the attorney-client privilege protects all confidential communications made to obtain or provide legal advice, whether the communication involves the attorney herself or takes place among necessary representatives of the client without the direct participation of the attorney. See Mass. Guide Evid. § 502(b); Hanover Ins., 449 Mass. at 616. Members of a corporate board are necessary agents of the corporation when it comes to seeking or implementing legal advice concerning potential or actual litigation that is material to the success or failure of the business. Indeed, since board members are responsible for managing the company, “a corporate director who is not adverse to the corporation” is entitled to have full and equal access to all legal advice provided to the board. Chambers v. Gold Medal Bakery, Inc., 464 Mass. 383, 394 (2013). The CPK Media Parties cite absolutely no authority in support of their argument that private communications among ATK board members about confidential legal advice are not covered by the attorney-client privilege.
The motion to compel filed by America’s Test Kitchen Inc. (doc. 43) is ALLOWED IN PART and DENIED IN PART. Defendants shall produce (i) all disputed communications to or from Matthew Sutton, and (ii) any other disputed communications to or from William Thorndike that were withheld only on grounds of attorney-client privilege or the common interest doctrine, and were not withheld under the work product doctrine. This motion is denied with respect to the disputed communications to or from William Thorndike to the extent that they contain or constitute protected work product, and with respect to the disputed communications to or from Melissa Baldino or Thomas Hagopian.
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Defendants shall, by April 20, 2018, file an affidavit from Ms. Baldino confirming that at the time of the disputed communications she was represented by the same lawyer or lawyers as Mr. Kimball, CPK Media LLC, or both of them.
The motion to compel filed by the CPK Media Parties (doc. 46) is DENIED.
30 March 2018
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - April 2, 2018 at 9:01 pm

Categories: News   Tags: , , , , , , ,

Silva v. Todisco Services, Inc. (Lawyers Weekly No. 09-027-18)

CHRISTOPHER SILVA, on behalf of himself and all others similarly situated
TODISCO SERVICES, INC. d/b/a Todisco Towing
Todisco Services, Inc., towed Christopher Silva’s motor vehicle without his consent from a private parking lot. This was a “trespass tow,” made at the request of the property owner or manager pursuant to G.L. c. 266, § 120D. Silva alleges that the mileage charge and fuel surcharge imposed by Todisco were illegal because the invoice or tow slip did not include information required by 220 C.M.R. § 272.03, a Department of Public Utilities (“DPU”) regulation that establishes maximum rates for involuntary tows. Silva asserts claims for violation of G.L. c. 93A, declaratory relief, negligent misrepresentation, intentional fraud, and unjust enrichment.
Silva has moved to certify a class of plaintiffs whose passenger vehicles were towed without their consent by Todisco, either as a trespass tow or as a “police tow” made at the request of a local police department, and who were assessed similar surcharges without being provided information required by the DPU regulation.
Todisco asserts that this action is moot because Todisco tendered payment of the full treble damages Silva seeks for himself under G.L. c. 93A. In the alternative Todisco urges the Court either to deny class certification completely or to certify a narrower class consisting only of people subjected to trespass tows.
The Court concludes that Todisco’s attempt to “pick off” the named plaintiff did not moot Silva’s individual claims or the class action. It will allow the class certification motion in part and, in the exercise of its discretion, will certify a class of “trespass tow” plaintiffs for the purposes of the claims asserted under c. 93A and for declaratory relief. But it will deny the motion to the extent that Silva seeks to include “police tow” plaintiffs in the class, and to the extent that he seeks to certify a class with respect to the misrepresentation, fraud, and unjust enrichment claims.
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1. Effect of Tender to Named Plaintiff. Todisco argues that Silva’s individual claims are moot, and that therefore class certification is inappropriate,1 because Todisco has already tendered the maximum amount of compensation that Silva himself could possibly recover in this action. Silva (or his son acting on his behalf) paid Todisco $ 169.00 to regain his vehicle after Todisco had towed it. In May 2017, almost 20 months after Silva filed this suit, Todisco sent Silva a check for three times that amount ($ 507.00). Todisco said in its cover letter that it tendered this payment “without any conditions and/or restrictions.” Silva responded by saying that he “rejected” Todisco’s “offer.” He returned the check to Todisco.
The Court concludes that Todisco’s unilateral tender of payment in full does not moot Silva’s individual claims and does not bar a class action, for several reasons.
1.1. The Complaint Seeks Additional Relief. Silva seeks more than monetary compensation. His complaint also asks for a class-wide permanent injunction and declaration of rights.
The tender of payment of the full amount of damages to Silva individually cannot moot claims for injunctive and declaratory relief either on behalf of Silva or, more importantly, on behalf of the putative class. See, e.g., Juliand v. Stanley Services, Inc., Suffolk Sup. Ct. civ. no. 1784CV01570-BLS2, 2018 WL 1041319 (Mass. Super. Ct. 2018) (Sanders, J.) (denying motion to dismiss similar class action); Johansen v. Liberty Mutual Group, Inc., no. 1:15-cv-12920-ADB, 2016 WL 7173753, at *3-*7 (D.Mass. 2016) (Burroughs, J.) (denying motion to dismiss).
“If the underlying controversy continues, a court will not allow a defendant’s voluntary cessation of his allegedly wrongful conduct with respect to named plaintiffs to moot the case for the entire plaintiff class.” Cantell v. Comm’r of Correction,
1 As a general matter, “[i]f an individual ‘may not maintain the action on [his or her] own behalf, he or she may not seek relief on behalf of a class.’ ” Barbara F. v. Bristol Div. of Juvenile Court Dept., 432 Mass. 1024 (2000) (rescript), quoting Doe v. The Governor, 381 Mass. 702, 704-705 (1980); but see Weld v. Glaxo Wellcome, 434 Mass. at 88 (holding that named plaintiff could represent class in suit against three defendant manufacturers even though he only had an individual claim against one of them); School Comm. of Brockton v. Massachusetts Comm’n Against Discrim., 423 Mass. 7, 14-15 (1996) (union was proper class representative of teachers, even though union itself suffered no injury).
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475 Mass. 745, 753 (2016) (lawsuit seeking injunctive and declaratory relief limiting segregation of proposed class of prisoners not mooted by release of four named plaintiffs from segregation), quoting Wolf v. Comm’r of Public Welfare, 367 Mass. 293, 299 (1975) (lawsuit seeking injunction ordering prompt replacement of unreceived public assistance checks for proposed class of beneficiaries not mooted by named plaintiff’s receipt of check).
“A case becomes moot ‘only when it is impossible for a court to grant any effectual relief whatever to the prevailing party’ ” (emphasis added.) Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 669 (2016), quoting Knox v. Service Employees, 132 S.Ct. 2277, 2287 (2012). “As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” Id., quoting Chafin v. Chafin, 133 S.Ct. 1017, 1023 (2013).
1.2. Unaccepted Tenders Do Not Moot Claims for Damages. In any case, Todisco’s tender of full payment to Silva would not moot the class claims even if Silva were only seeking monetary compensation on behalf of the proposed class members.
Where a plaintiff brings a “case as a putative class action, … the class action allegations contained in the amended complaint remain operative until a judge has considered and rejected them on their merits,” even if the defendant has “voluntarily … cease[d] the allegedly wrongful conduct with respect to [the] named plaintiff….” Cantell, 475 Mass. at 753. After all, “[i]n class actions … the class itself is the real party in interest” (emphasis in original). Weld v. Glaxo Wellcome Inc., 434 Mass. 81, 88 (2001), quoting Cedar Crest Funeral Home, Inc. v. Lashley, 889 S.W.2d 325, 329 (Tex. Ct. App. 1993).
For this reason, an unaccepted offer of judgment in the full amount sought by the named plaintiff cannot moot a putative class action. Campbell-Ewald, 136 S.Ct. at 670; see also Reniere v. Alpha Mgmt. Corp., MICV2013-00560, 32 Mass. L. Rptr. 410, 2014 WL 7009753 (Mass. Super. Ct. 2013) (Salinger, J.) (collecting cases decided before Campbell-Ewald). As the Supreme Court has explained, “[w]hen a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief. An unaccepted settlement offer—like any unaccepted contract offer—is a legal nullity,
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with no operative effect.” Campbell-Ewald, supra, quoting Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523, 1533 (2013) (Kagan, J., dissenting). “Nothing in Rule 68 alters that basic principle; to the contrary, that rule specifies that ‘[a]n unaccepted offer is considered withdrawn.’ ” Id., quoting Genesis Healthcare, supra, quoting in turn Fed. R. Civ. P. 68. The same is true under Massachusetts law. See Mass. R. Civ. P. 68; Baghdady v. Lubin & Meyer, P.C., 55 Mass. App. Ct. 316, 324 (2002).
Todisco tries to distinguish Campbell-Ewald on the ground that it involved an offer of judgment, whereas in this case Todisco tendered payment of the full amount of treble damages without requiring Silva to agree to the entry of judgment and without any other conditions or restrictions.
The Court is not convinced that this distinction makes any difference. If a defendant cannot moot a putative class action by offering to pay the named plaintiff the full amount of her claimed damages, it similarly cannot do so by actually tendering payment of the same amount. “[T]here is no principled difference between a plaintiff rejecting a tender of payment and an offer of payment”; “in either case, the plaintiff ends up in the exact same place he occupied before his rejection.” Ung v. Universal Acceptance Corp., 180 F.Supp.3d 855, 860-863 (D.Minn. 2016).
Most federal courts facing the issue have rejected similar efforts to circumvent Campbell-Ewald, holding that tender of full payment to a named plaintiff does not moot a putative class action.2 Although these cases were all decided under the federal
2 It appears that the majority view among federal courts is that a tender of full payment to the named plaintiff in a putative class action does not moot the named plaintiff’s individual claims, and therefore cannot moot the class claims. See, e.g., Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541, 545-546 (7th Cir. 2017); Chen v. Allstate Ins. Co., 819 F.3d 1136, 1144-1146 (9th Cir. 2016); Bennett v. Office of Federal Employee’s Group Life Ins., 683 Fed.Appx. 186, 188 (4th Cir. 2017) (unpublished); Family Medicine Pharmacy, LLC v. Perfumania Holding, Inc., c.a. 15-0563-WS-C, 2016 WL 3676601, at *6-*8 (S.D. Ala. 2016); Bell v. Survey Sampling Int’l, LLC, 3:15-CV-1666 (MPS), 2017 WL 1013294, at *5-*6 (D.Conn. 2017); Heather McCombs, D.P.M, L.L.C. v. Cayan LLC, c.a. 15 C 10843, 2017 WL 1022013, at *4 (N.D.Ill. 2017); Thelma Jean Lambert Living Trust v. Chevron U.S.A., Inc., no. 14-1220-JAR-TJJ, 2016 WL 6610898, at *21 (D.Kan. 2016); Machesney v. Lar-Bev of Howell, Inc., no. 10-10085, 2016 WL 1394648, at *7 (E.D. Mich. 2016); Ung, supra (D.Minn.); Getchman v. Pyramid Consulting, Inc., 4:16 CV 1208 CDP, 2017 WL 713034, at *3 (E.D.Mo. 2017); Brady v. Basic Research, L.L.C., no. 13-cv-7169, 2016 WL 1735856, at *2 (E.D.N.Y. 2016); Bais Yaakov of Spring Valley v. Graduation
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rules of civil procedure, the same principles apply to class actions brought under Mass. R. Civ. P. 23. See generally Smaland Beach Ass’n, Inc. v. Genova, 461 Mass. 214, 228 (2012) (judicial construction of federal rules of civil procedure applies to parallel Massachusetts rules, “absent compelling reasons to the contrary or significant differences in content” (quoting Strom v. American Honda Motor Co., 423 Mass. 330, 335 (1996), and Rollins Envtl. Servs., Inc., v. Superior Court, 368 Mass. 174, 180 (1975)).
The principle that a defendant cannot evade a viable class claim by paying the named plaintiff’s personal claim is of particular importance in the context of class actions brought on behalf of individual consumers under G.L. c. 93A, § 9(2). The Legislature enacted that law to provide an effective remedy for people who are harmed by an unfair or deceptive business practice, even if each consumer suffers such a small injury that none of them could reasonably seek compensation on an individual basis. “[W]hen the judge is deciding a [class] certification request under § 9(2), the judge must bear in mind [that there is] ‘ “a pressing need for an effective private remedy” for consumers, and that “traditional technicalities are not to be read into the statute in such a way as to impede the accomplishment of substantial justice.” ’ ” Aspinall v. Philip Morris Cos. Inc., 442 Mass. 381, 391-392 (2004), quoting Fletcher v. Cape Cod Gas Co., 394 Mass. 595, 605 (1985). “The right to a class action in a consumer protection case is of particular importance where, as here, aggregation of small claims is likely the only realistic option for pursuing a claim.” Feeney v. Dell Inc., 454 Mass. 192, 202 (2009).
Source, LLC, 167 F.Supp.3d 582, 584 (S.D.N.Y. 2016); Maddox v. Bank of New York Mellon Trust Co., 2016 WL 4541587, at *3-*4 (W.D.N.Y. 2016); Pankowski v. Bluenrgy Group Ltd., c.a. H-15-1668, 2016 WL 7179122, at *3 (S.D.Tex. 2016)
Several federal judges sitting in the District of Massachusetts have held that such a tender may moot the named plaintiff’s claims, but that under the so-called “inherently transitory” exception to mootness such a tender will not bar the plaintiff from seeking class certification. See South Orange Chiropractic Center, LLC v. Cayan LLC, no. 15-13069-PBS, 2016 WL 1441791, at *4-*8 (D.Mass. 2016) (Saris, C.J.) (collecting federal appellate cases); Bais Yaakov of Spring Valley v. ACT, Inc., 221 F.Supp.3d 183, 187-189 (D.Mass. 2016) (Hillman, J.) (following South Orange Chiropractic).
The Court respectfully disagrees with the contrary ruling in Demmler v. ACH Food Cos., Inc.¸ c.a. 15-13556-LTS, 2016 WL 4703875 (D.Mass. 2016) (Sorokin, J.).
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Consumers do not lose the chance to seek an effective private remedy through a c. 93A class action merely because the defendant chooses to pay the entire amount of the named plaintiff’s individual claim. Although the Massachusetts appellate courts have not addressed this issue, other trial judges have reached the same conclusion. See Meaney v. OneBeacon Ins. Co., SUCV2007-01294-BLS2, 2007 WL 5112809, *2 (Mass. Super. Ct. 2007) (Gants, J.); Hermida v. Archstone, 950 F.Supp.2d 298, 309 (D.Mass. 2013) (Young, J.) (citing Meaney); Chang v. Wozo LLC, no. 11-cv-10245-DJC, 2012 WL 1067643, *9 (D.Mass. 2012) (Casper, J.) (citing Meaney); accord Reniere v. Alpha Mgmt. Corp., MICV2013-00560, 32 Mass. L. Rptr. 410, 2014 WL 7009753 (Mass. Super. Ct. 2013) (Salinger, J.).
In sum, neither Silva’s individual claims nor his class claims are moot. The Court must therefore address the merits of his motion for class certification.
2. Legal Background.
2.1. Standards for Class Certification. To obtain certification of a class with respect to the for misrepresentation, fraud, and unjust enrichment, Silva must demonstrate that “(1) the class is so numerous that joinder of all members is impracticable” [numerosity], “(2) there are questions of law or fact common to the class” [commonality], “(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class” [typicality], and “(4) the representative parties will fairly and adequately protect the interests of the class” [adequacy of representation]. See Mass. R. Civ. P. 23(a). If these requirements are met, Silva must also show “that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members,” [predominance] and “that a class action is superior to other available members for the fair and efficient adjudication of the controversy” [superiority]. See Mass. R. Civ. P. 23(b).
Certification of a class action with respect to claims under G.L. c. 93A may be appropriate if the named plaintiff can “show that the putative class members suffered ‘similar,’ although not necessarily identical, injuries as a result of the defendant’s unfair or deceptive conduct.” Bellermann v. Fitchburg Gas & Elec. Light Co., 470 Mass. 43, 53 (2014), quoting G.L. c. 93A, §§ 9(2), 11. Furthermore, “Section 9(2) requires satisfaction of the same elements of numerosity, commonality, typicality,
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and adequacy of representation as are required by Mass. R. Civ. P. 23(a).” Moelis v. Berkshire Life Inc. Co., 451 Mass. 483, 489 (2008). “Unlike rule 23, however, § 9(2) does not require that common issues predominate over individual ones, or that a class action be superior to other methods of litigation.” Id. at 489-490. A court nonetheless “has discretion to consider issues of predominance and superiority” in deciding whether to certify a class claim under c. 93A. Id. at 490.
“[A] party moving for class certification need only provide ‘information sufficient to enable the motion judge to form a reasonable judgment’ that certification requirements are met.” Aspinall, 442 Mass. at 391-392, quoting Weld, 434 Mass. at 87. “[N]either the possibility that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the suit might unforeseeably prove the original decision to certify the class wrong, is a basis for declining to certify a class which apparently satisfies the Rule.” Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 363 (2008), quoting Weld, 434 Mass. at 87, and Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975), cert. denied, 429 U.S. 816 (1976).
A judge has broad discretion to grant or deny a motion to certify a class, both under Rule 23 and under c. 93A, § 9(2). See Weld, 434 Mass. at 84-85 (Rule 23); Moelis, 451 Mass. at 489 (c. 93A).
2.2. No Expression of Class Interest Is Required. Todisco’s assertion that Silva must also prove that other potential class members have expressed some interest in pursuing similar claims against Todisco is without merit.
Such a requirement would be inconsistent with the very that the law permits class actions. “One of the primary purposes of the class action mechanism is ‘to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.’ ” Hazel’s Cup & Saucer, LLC v. Around The Globe Travel, Inc., 86 Mass. App. Ct. 164, 166 (2014), quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997). This may be especially true with respect to class actions under c. 93A, which reflects “a strong public policy in favor of
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the aggregation of small consumer protection claims” that no individual consumer would rationally pursue on their own. Feeney, 454 Mass. at 201-203.
In making the argument that Silva should be required to show some demonstrated interest among the proposed class members, Todisco relies on several federal decisions that denied conditional certification under the Fair Labor Standards Act (“FLSA”) because of a lack of such interest. See O’Donnell v. Robert Half Int’l, Inc., 429 F.Supp.2d 246, 250-251 (D.Mass. 2006) (Gorton, J.); Horne v. United Servs. Auto. Ass’n, 279 F.Supp.2d 1231, 1236-1237 (M.D. Ala. 2003).
“This argument fails to recognize, however, that Rule 23 [and c. 93A] class actions and FLSA class actions are materially different. FLSA class actions require potential plaintiffs to opt-in.” Garcia v. E.J. Amusements of New Hampshire, Inc., 98 F. Supp. 3d 277, 289–90 (D. Mass. 2015) (Saris, C.J.). Indeed, by statute no one may be made a plaintiff to an FLSA action unless the “consent in writing … and such consent is filed” with the court. See 29 U.S.C. § 216(b). “As a result, courts have recognized that it makes no sense to grant conditional certification under the FLSA if no putative class members are interested in joining the suit.” Garcia, supra. In contrast, “Massachusetts law does not allow,” never mind require, “an ‘opt in’ class any more than it allows an ‘opt out’ class.” Sullivan v. First Massachusetts Fin. Corp., 409 Mass. 783, 790 (1991). The “expression of interest” requirement to obtain conditional certification in FLSA cases is irrelevant here.3
3. Rulings on Class Certification.
3.1. Negligent Misrepresentation, Intentional Fraud, and Unjust Enrichment Claims. The Court agrees with Todisco that it would not be appropriate to certify a plaintiff class with respect to the claims asserted in Counts I-III of the amended complaint. Even assuming that the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation are satisfied, the Court is
3 Todisco’s reliance on Andrews v. Bechtel Power Corp., 780 F.2d 124, 131 (1st Cir. 1985), is also misplaced. In that case the First Circuit held that the district court did not abuse its discretion in determining that the proposed class did not satisfy the numerosity requirement in Fed. R. Civ. P. 23(a)(1) because joinder of all potential class members was feasible. The sentence mentioning “lack of interest” merely summarizes part of the district court’s decision; it is not a holding by the First Circuit.
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not convinced that common questions of law or fact predominate over individualized issues that must be resolved separately for each class member. Since this requirement of Rule 23(b) is not satisfied, the Court will deny class certification as to these three claims. See generally Bellermann, 470 Mass. at 58 (“a judge retains discretion to deny certification” based on extent to which “individualized inquiries” will be needed to resolve class claims); accord, e.g., Fletcher, 394 Mass. at 603-604; Dane v. Board of Reg. of Voters of Concord, 374 Mass. 152, 160 (1978).
Reasonable or justifiable reliance is an element of the negligent misrepresentation and intentional fraud claims. See DeWolfe v. Hingham Centre, Ltd., 464 mass. 795, (2013) (“justifiable reliance” on information supplied is element of tort of negligent misrepresentation); Passatempo v. McMenimen, 461 Mass. 279, 301 (2012) (“reasonable reliance” is “a necessary element of fraud”). It is something that must be proved, not merely assumed. Even if Silva could readily establish that Todisco made the same kind of misrepresentation, or omission of material facts that Todisco had a duty to disclose,4 resolution of these claims would still require an individualized determination of how each class member relied on the statement or omission and whether that reliance was reasonable under the circumstances. Under these circumstances the Court is not convinced that common issues predominate over individual ones. Cf. Fletcher, 394 Mass. at 603 (affirming similar ruling).
The Court recognizes that the SJC has held that class-wide claims for invasion of privacy can be maintained without the need to prove the “precise reaction” of each class member to the alleged invasion where “the alleged injuries were the result of [a] single course of conduct.” Weld, 434 Mass. at 92. But it does not follow that the claims of fraud in this case can be maintained on a class basis without having to prove individual reliance. The putative class members did not ask to have their vehicles towed. They had no say in the matter. As a result Silva cannot show that other class members relied upon alleged misrepresentations in agreeing to have their vehicles towed, because the proposed class members never gave any such consent.
4 Cf. Sahin v. Sahin, 435 Mass. 396, 402 n.9 (2001) (“Fraud by omission requires both concealment of material information and a duty requiring disclosure.”).
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Under these circumstances, proof of the other elements of fraud or misrepresentation would not suffice to establish reasonable or justifiable reliance.
Much the same is true of the claim that Todisco was unjustly enriched by retaining charges for involuntary tows. “Unjust enrichment occurs when a party retains the property of another ‘against the fundamental principles of justice or equity and good conscience.’ ” Bonina v. Sheppard, 91 Mass. App. Ct. 622, 625, review denied, 477 Mass. 1109 (2017), quoting Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005). Whether retention of money or some other benefit is unjust “turns on the reasonable expectations of the parties.” Id., quoting Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 644 (2013).
Since Todisco made a lawful tow of each putative class member’s vehicle, it would not be unjust to allow Todisco to assess and retain a reasonable charge for each tow. A highly individualized determination would be needed to determine the subjective expectations of each proposed class member, in order to decide whether Todisco was unjustly enriched by retaining what they paid to retrieve their vehicle. Class certification would be inappropriate on the unjust enrichment claim because Silva has not shown that common issues predominate.
3.2. Chapter 93A and Declaratory Relief Claims. In contrast, the Court is convinced that Silva has made an adequate showing as to all of the class certification requirements under G.L. c. 93A, § 9(2). It concludes that certification of a class—albeit a class that only includes “trespass tow” plaintiffs, and does not also include “police tow” plaintiffs as proposed by Silva—is appropriate with respect to the c. 93A claims and so much of the declaratory judgment claim that seeks declaratory relief as to the alleged violations of c. 93A. The Court agrees with Todisco that the class definition should including a time limit consistent with the four-year statute of limitations that applies to claims asserted under c. 93A. See G.L. c. 260, § 5A.5
3.2.1. Similarity of Injury. Silva has adequately shown for class certification purposes that “the putative class members suffered ‘similar,’ although
5 In addition to the issues addressed below, Todisco repeats in its opposition many of the arguments that it made in support of its unsuccessful motion to dismiss. The Court addressed those arguments in its memorandum and order dated January 23, 2017. It will not reiterate its prior rulings.
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not necessarily identical, injuries as a result of the defendant’s [allegedly] unfair or deceptive conduct.” Bellermann, 470 Mass. at 53. The putative class members were all subjected to involuntary tows and compelled by Todisco to pay mileage charges and fuel surcharges without receiving information that Todisco was required to disclose by a regulation designed to protect individual consumers. Silva has asserted a plausible claim that Todisco has violated a regulation that requires towing companies to disclose mileage and fuel surcharge information when charging someone for an involuntary tow (whether a trespass tow or a police tow), see 220 C.M.R. § 272.03, that this DPU regulation was intended to protect consumers, and that Todisco’s violation of this regulation, if proved, would therefore constitute a per se violation of G.L. c. 93A. See 940 C.M.R. § 3.16(3); Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 174-175 (2013). The proposed class members all suffered a similar injury; they were compelled to pay allegedly unlawful mileage and fuel surcharges to Todisco as a condition of getting their vehicle back.
3.2.2. Commonality. For the same reasons, “there are questions of law or fact common to the class,” and Silva has therefore satisfied the commonality requirement. See Mass. R. Civ. P. 23(a)(2).
Todisco argues that class certification is inappropriate because any damages would have to be calculated on an individual basis. The Court disagrees.
Although some “individualized inquiry” and calculations would be needed to determine damages if the class were to prevail on the merits, “such necessity at the damages stage does not preclude class certification where all other requirements are met.” Weld, 434 Mass. at 92; accord Salvas, 452 Mass. at 364 (“Class certification may be appropriate where common issues of law and fact are shown to form the nucleus of a liability claim, even though the appropriateness of class action treatment in the damages phase is an open question.”).
3.2.3. Numerosity. The element of numerosity is easily satisfied here. Silva has presented evidence, based on Todisco’s own reports to the DPU, that there are thousands of putative class members based on trespass tows alone.
Todisco quibbles with this evidence, arguing that the DPU regulation only requires that mileage information be provided for involuntary tows in excess of five
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miles, and that some of its trespass tows may have been shorter than that. But even assuming that many of Todisco’s involuntary tows were for less than five miles, that would still mean that there are hundreds or even thousands of class members who may be entitled to damages with respect to unlawful mileage charges. And it appears that all putative class members have claims with respect to the fuel surcharges, even if their vehicle was towed less than five miles.
The Court concludes that joining all class members as individual plaintiffs would add significant expense and complexity to this lawsuit without any offsetting advantage, and that such joinder is therefore impracticable. Joinder of all class members as individual plaintiffs is “impracticable” within the meaning of Rule 23 if doing so would be “impractical, unwise or imprudent;” plaintiffs need not show that joiner is “impossible or incapable of being performed.” Brophy v. School Comm. of Worcester, 6 Mass. App. Ct. 731, 735 (1978).
3.2.4. Typicality. The Court concludes that Silva has satisfied the typicality requirement with respect to proposed class members who were subjected to trespass tows. “Typicality is established when there is ‘a sufficient relationship … between the injury to the named plaintiff and the conduct affecting the class,” and the claims of the named plaintiff and those of the class “are based on the same legal theory.’ ” Weld, 434 Mass. at 87, quoting 1 H. Newberg, Class Actions § 3.13, at 3-76 (3d ed. 1992)). As discussed above, all claims on behalf of trespass tow class members are based on the same legal theory and concern similar injuries.
The Court agrees with Todisco, however, that Silva has not satisfied the typicality claim with respect to people whose vehicles were transported because of a police tow. Determining which police-requested tows are involuntary tows conducted pursuant to G.L. c 159B, § 6B, involves legal and factual issues that are not raised by Silva’s personal claims, because he was subjected to a trespass tow. The Court therefore concludes, in the exercise of its discretion, that it will redefine the proposed class to include only people who were subjected to trespass tows. Cf. Bellermann, 470 Mass. at 58 (“Where a natural alternative class or set of subclasses would address a judge’s concerns about certifying a class as initially proposed, the judge should redefine the original class or certify subclasses as appropriate.”).
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3.2.5. Adequacy of Representation. Finally, the Court concludes that Silva and his counsel will fairly and adequately protect the interests of the class. Silva’s interests are aligned with the interests of the other class members. And Silva’s counsel is experienced and competent in conducting consumer class action litigation.
Plaintiff’s motion for class certification is ALLOWED IN PART with respect to the claims for relief under G.L. c. 93A and for declaratory judgment, and DENIED IN PART with respect to the claims for negligent misrepresentation, intentional fraud, and unjust enrichment in Counts I-III of the first amended complaint, and with respect to the request to include so-called “police tow” plaintiffs in the certified class.
The Court hereby certifies a plaintiff class consisting of all owners of any passenger motor vehicle displaying a passenger or motorcycle plate who: (a) had their passenger vehicle towed without their consent by Todisco Services, Inc. (d/b/a Todisco Towing) after September 5, 2012, from a private way or private property at the direction of someone having lawful control of such way or property; and (b) were assessed and paid a mileage surcharge for mileage in excess of five miles although Todisco did not record the mileage on the invoice or tow slip, or were assessed and paid a fuel surcharge although Todisco did not record fuel surcharge information on the invoice or tow slip, or both.
This plaintiff class is certified solely for the purpose of pressing the pending claims against Todisco Services, Inc., under G.L. c. 93A and so much of the pending declaratory judgment claim that seeks declaratory relief as to the alleged violations of c. 93A
March 6, 2018
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - March 20, 2018 at 2:36 pm

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Rafferty v. Merck & Co., Inc., et al. (Lawyers Weekly No. 10-041-18)

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;


BRIAN RAFFERTY  vs.  MERCK & CO., INC., & another.[1]

Middlesex.     November 6, 2017. – March 16, 2018.

Present:  Gants, C.J., Gaziano, Budd, & Cypher, JJ.

Negligence, Pharmaceutical manufacturer, Adequacy of warning, Duty to warn, Standard of care.  Actionable tort.  Public Policy.  Consumer Protection Act, Unfair or deceptive act, Trade or commerce.  Practice, Civil, Motion to dismiss.

Civil action commenced in the Superior Court Department on October 10, 2013. read more


Posted by Massachusetts Legal Resources - March 17, 2018 at 12:44 am

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Boston Restoration Resources, Inc. v. Pitts, et al. (Lawyers Weekly No. 09-026-18)



SUFFOLK, ss                                                                                                                                    SUPERIOR COURT

  1. 17-1142-C





                                    BOSTON RESTORATION RESOURCES, INC.




                                LORENZO PITTS, INCORPORATED, WILLETTA

                                 PITTS-GIVENS, REBECCA MAUTNER, LESLIE

                                   BOS, and JAMAICA PLAIN NEIGHBORHOOD

                                              DEVELOPMENT CORPORATION read more


Posted by Massachusetts Legal Resources - March 16, 2018 at 5:35 pm

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Cedar-Fieldstone Marketplace, LP v. T.S. Fitness, Inc., et al. (Lawyers Weekly No. 11-030-18)

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;

17-P-791                                        Appeals Court


No. 17-P-791.

Bristol.     February 2, 2018. – March 15, 2018.

Present:  Milkey, Massing, & Shin, JJ.

Guaranty.  Contract, Lease of real estate, Release from liability, To guarantee rent payments.  Release.  Real Property, Lease.

Civil action commenced in the Superior Court Department on June 18, 2015. read more


Posted by Massachusetts Legal Resources - March 15, 2018 at 4:32 pm

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Bassett, et al. v. Triton Technologies, Inc., et al. (Lawyers Weekly No. 09-022-18)



SUFFOLK, ss.                                                                                   SUPERIOR COURT

                                                                                                            CIVIL ACTION

                                                                                                            No. 16-3475 BLS 2





and on behalf of all others similarly situated













Posted by Massachusetts Legal Resources - March 10, 2018 at 7:44 am

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North American Catholic Educational Programming Foundation, Inc., et al. v. Clearwire Spectrum Holdings II LLC, et al. (Lawyers Weekly No. 09-023-18)



SUFFOLK, ss.                                                                                   SUPERIOR COURT

                                                                                                            CIVIL ACTION

                                                                                                            No. 15-3118 BLS 2













Plaintiffs are non-profit entities that hold licenses from the Federal Communications Commission (FCC) to operate Educational Broadband Services (EBS) channels in certain geographic markets.  In 2006, plaintiffs granted access to a portion of their wireless communication spectrum to defendants Clearwire Spectrum Holdings LLC and Clearwire, Legacy, LLC (Clearwire) pursuant to various written Agreements, including Master Royalty and Use Agreements (MRUAs).  The defendant Sprint Spectrum L.P. (Sprint) subsequently acquired all the stock in Clearwire’s parent, and a dispute arose between Sprint and the plaintiffs as to what services Sprint was obligated to provide plaintiffs’ customers.  Plaintiffs took the position that Clearwire had effectively sublicensed its use of the broadband spectrum to Sprint, and that, pursuant to the Agreements, this required plaintiffs’ consent – consent which they were entitled to withhold unless Sprint agreed to provide broadband access to plaintiff’s customers that was equivalent to what Clearwire itself would have provided had there been no sublicense. read more


Posted by Massachusetts Legal Resources - March 10, 2018 at 12:35 am

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Barton & Associates, Inc. v. Matarese, et al. (Lawyers Weekly No. 09-021-18)

On December 1, 2005, this court (van Gestel, J.) entered a Final Judgment concluding this case based upon a settlement agreement reached by the parties. The Final Judgment contained a number of elements, among them cash payments from the defendants, Joseph Matarese and Medicus Staffing LLC (Medicus),1 to the plaintiff, Barton & Associates, Inc. (Barton), and a permanent injunction precluding Medicus from hiring anyone previously employed by Barton. Medicus has filed the pending motion under M.R.Civ.P. 60(b)(5) requesting relief from the permanent injunction. For the reasons that follow, the motion is DENIED.
1 As noted in the caption Medicus has changed its name since the Final Judgment entered. The defendants will be referred to collectively as Medicus, unless it is necessary to distinguish between them.
Barton and Medicus are both in the “locum tenens staffing” business. “Locum tenens” is a Latin term apparently originating in the Seventeenth Century generally meaning “a temporary substitute, especially for a doctor or member of the clergy.” It has more recently been used to refer to the business of temporarily placing physicians or other medical professionals with employers. See Wikipedia, locum tenens, last edited January 31, 2018. Barton was first established in 2001, and Matarese was among its first employees, serving as its Director of Operations. Barton maintains that Matarese was the author of its first business plan. In January, 2004, Matarese left Barton and formed Medicus, which began to compete with Barton and solicit its customers. In February, 2004, Barton sued Matarese asserting a number of claims all predicated on his having founded a competing business; in September, 2004, it added Medicus as a defendant.
On September 22, 2005, just prior to trial, the parties reported to the court that the case had settled. That day the court ordered the parties to submit to the court a sealed letter that accurately described the parties’ settlement agreement. The order went on to explain that if the parties had not submitted an agreement for judgment within 45 days, it would open the letter and, if it believed it appropriate, enter a final judgment based upon the terms described in the letter. The parties submitted the letter, but were unable themselves to agree upon and execute the documents concluding the case. The court then opened the letter and entered a Final Judgment incorporating its terms. Medicus filed a notice of appeal from the entry of the judgment, but soon thereafter dismissed the appeal. The Final Judgment included the following provision which is the subject of the pending motion.
Further, with the exception of Stephanie Chinchillo and Julie Hansen, the Defendants, Joseph Matarese and Medicus Staffing, LLC are restrained and enjoined from hiring any employees who have been employed at Baron & Associates, Inc. in their medical/healthcare business provided that any such restraint shall not apply if Barton & Associates, Inc., on or before one year from the date hereof hires any current or former employee of Medicus Staffing, LLC.
Barton did not hire any Medicus employee, and the injunction therefore became permanent.
Medicus maintains that in 2004 it had only 9 employees, all of whom worked in Salem, New Hampshire, and Barton had only 8 employees. Today, Medicus has approximately 250 employees, most of whom work in Windham, New Hampshire. It recruits and places physicians and other health care providers who work in a broad variety of health care fields. Medicus points out that Barton’s corporate offices are in Massachusetts, but, according to Barton’s website, it also has offices in Connecticut, Florida, Texas, New Hampshire (Keene), Arizona, and Nevada. Industry reports suggest that Barton has between 500 and 1000 employees.
Medicus also avers that the locum tenens staffing business is far different than it was in 2005, in part, because potential employees post so much information about themselves and their experience on-line making recruitment much different. Nonetheless, a tight labor market has made it difficult for Medicus to hire additional employees.
Medicus explains that a former employee of Barton, who left Barton in June, 2016 to work in other areas (a beauty salon and a Wholefoods), responded to a Medicus job posting that it placed on LinkedIn for a locum tenens recruiter. It agreed to hire this candidate effective one year after the date she left her position with Barton. However, when Barton learned of this, it filed a complaint for contempt based upon the provision in the Final Judgment quoted above. This led Medicus to let this employee go and to file this motion for relief from the permanent injunction entered in 2005.
Mass.R.Civ.P. 60(b), as relevant to the issue presented by this motion, reads as follows:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: . . . (5) . . . it is no longer equitable that the judgment should have prospective application. . . .
The Reporter’s Notes to this section provide: “The third clause of Rule 60(b)(5) only applies to judgments having a prospective effect, as, for example, an injunction, . . . . Specifically, the clause allows relief from a judgment which was valid and equitable when rendered but whose prospective application has, because of change conditions become inequitable. This power to grant relief from the prospective features of a judgment has always been clearly recognized in equity.”
There is substantially more Federal case law reflecting on the standards that should be applied in determining when a permanent injunction should be modified under Fed.R.Civ.P. 60(b)(5), in particular when the injunction has been entered by consent of the parties, than exists in Massachusetts jurisprudence. For many years, the Federal Courts applied the standard articulated by the United States Supreme Court in United States v. Swift & Co. 286 U.S. 106, 119 (1932): “The injunction, whether right or wrong, is not subject to impeachment in its application to the conditions that existed at its making . . . . Nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change what was decreed after years of litigation with the consent of all concerned.” However, more recently, in Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992), the Supreme Court adopted a more flexible standard holding that “the ‘grievous wrong’ language in Swift was not intended to take on a talismanic quality, warding off virtually all efforts to modify consent decrees.” Id. at 379. It explained that “[a] party seeking modification of a consent decree may meet its initial burden by
showing either a significant change in factual conditions or in law. Modification of a consent decree may be warranted when changed factual conditions make compliance with the decree substantially more onerous. . . . Modification is also appropriate when a decree proves to be unworkable because of unforeseen obstacles. Id. at 384.
In Rufo, the Supreme Court based its analysis, in part, on an “upsurge in institutional reform litigation since Brown v. Board of Education, 347 U.S. 483 (1954),” and its concern that “because such decrees often remain in place for extended period of time, the likelihood of significant changes occurring during the life of the decrees is increased.” Id. at 380. This led some courts to question whether the more flexible approach suggested by Rufo should be applied to consent decrees entered in commercial litigation between private parties, as well decrees entered in institutional reform litigation. In Alexis Lichine & Cie v. Sach A. Lichine Estate Seletins, Ltd., 45 F.3d 582,586 (1st Cir. 1994), the First Circuit applied the teaching of Swift and Rufo to such a commercial case. It reasoned:
In our view, Rule 60(b)(5) sets forth the umbrella concept of “equitable” that both Swift and Rufo apply to particular, widely disparate fact situations.
Indeed, the Rufo Court quoted the basic distinction drawn in Swift between decrees protecting “rights fully accrued upon facts so nearly permanent as to be substantially impervious to change” and decrees involving “the supervision of changing conduct or conditions and are thus provisional and tentative.” Id. 502 U.S. at 379, 112 S.Ct. at 758 (quoting from 286 U.S. at 114-15, 52 S.Ct. at 462-63). Swift illustrates the former and Rufo the latter. We view this not as a limited dualism but as polar opposites of a continuum in which we must locate the instant case.
We therefore agree with cases like In re Hendrix, 986 F.2d 195, 198 (7th Cir.1993), viewing Rufo’s flexible standard as “no less suitable to other types of equitable case[s],” but also share the concerns voiced in cases like W.L. Gore & Assocs. v. C.R. Bard, Inc., 977 F.2d 558, 560-62 (Fed.Cir.1992), about the importance of finality when a decree is based on a negotiated bargain in a commercial case between private parties. Thus, rather than saying either that there is an “institutional reform” exception to Swift or a “private commercial party” exception to Rufo, we apply Rule 60(b)(5) having in mind that we are dealing with a decree arising from a commercial dispute and based on a bargain voluntarily entered into by businessmen represented by lawyers.
Such a decree is shielded from facile modification by a rather formidable carapace. The public interest noted in Rufo is not a factor, see 502 U.S. at 379-83, 112 S.Ct. at 758-59, other than the interest of the public in general and the business community in particular in the stability of final agreements. Nor is it persuasive that “it is no longer convenient to live with the terms of a consent decree.” Id. at 383, 112 S.Ct. at 760. Therefore, in considering whether a decree arising out of commercial litigation between two private parties should be modified, a court should look to such factors as the circumstances leading to the decree (including the nature of a party’s initial wrongdoing), the quantum of hardship on the burdened party, the duration of the burden thus far and the prospect of its continuing, and the benefitted party’s need for a continuation of the decree.
In Mitchell v. Mitchell, 62 Mass. App. Ct. 769, 779-780 (2005), the Appeals Court cited Alexis Lichine & Cie as providing a useful approach to considering a request to modify a restraining order issued under G.L. c. 209A; and in Great Woods, Inc. v. Clemmey, 89 Mass. App. Ct. 788, 794-795 (2016) it applied these concepts in the context of a private dispute between neighbors. Relying on MacDonald v. Caruso, 467 Mass 382, 388-389 (2014) (another case involving a request to modify a chapter 209A restraining order), the Great Woods court went on to explain that the “significant change in circumstances must involve more than the mere passage of time” and if there is such a change, it is important to consider if it was “not foreseen when the last order issued.” With these concepts in mind, we turn to Medicus’ motion to modify the permanent injunction to which it consented in 2005.
Alexis Lichine & Cie suggests that the court look to the circumstances leading to the agreement that the Final Judgment issue, including the nature of Medicus’ wrongdoing. Frankly, the court is not able to assess the parties’ respective wrongdoing. Barton of course avers that Matarese was a faithless servant who breached his fiduciary obligations to his beneficent employer. The court is unable to make such a finding. The parties entered into their settlement agreement to avoid a trial which was about to begin. Clearly, however, the permanent injunction
on hiring former employees of Barton was part of a settlement agreement with a number of elements, which included substantial cash payments from Medicus to Barton. Both parties were represented by counsel, and it is impossible today to determine what other benefits, financial or otherwise, Medicus may have bargained for in return for that permanent injunction. Indeed, the permanent injunction may well have been equitable relief that exceeded what a court would have entered if the case had been tried, but it is also possible that monetary damages might have been awarded that were substantially greater than Barton agreed to accept under the terms of the settlement. This court can now determine only that the many provisions of the settlement were undoubtedly interrelated, and the court should be cautious in undoing a settlement, which is in effect simply a contract, entered into by sophisticated parties each represented by counsel.
The obvious changed circumstance is the size of these businesses today compared to what they were 13 years ago. Although Barton is much larger than Medicus, it appears that both companies have succeeded economically. While Medicus may be constrained in recruiting new employees because it cannot hire anyone who previously worked for Barton, this has not prevented it growing to the point that it has nearly 40 times the number of employees that it did in 2005. While there may not be many additional companies in this part of New England engaged in locum tenens staffing, the court notes that the marketplace for companies providing temporary employment for a wide variety of professionals is highly competitive. The fact that Medicus may not have access to a handful of potential employees that have worked in this specific type of temporary placement does not appear to have been an obstacle to its growth and success.
The court is not convinced that Barton actually has substantial business need for the continued enforcement of this very broad permanent injunction—at least in the scope that it
issued in 2005. Apparently, Barton has its employees execute non-compete agreements that prohibit them from working for a competitor, such as Medicus, for a year after leaving Barton. Further, Medicus has conceded that any modification of the injunction should expressly continue to prevent Medicus from employing any former Barton employee, where that employment would violate the terms of a non-compete agreement that the employee had signed. The court has substantial doubt that, with respect to many modestly paid recruiters, like the young woman who Medicus sought to employ last year, these individuals have trade secrets that might be revealed to Barton’s irreparable injury, if they went to work for Medicus after leaving Barton’s employ.
However, the question before the court is not whether it would enter the injunctive relief today in a contested litigation between the parties, but rather whether Medicus should be relieved of a term of the agreement that it negotiated in 2005. The court finds that on the continuum of cases described in Alexis Lichine & Cie, this case is more like Swift than Rufo. Neither the commercial success of the parties in the intervening years, nor changes in the market place, have been so dramatic to warrant a modification of the injunction that Medicus agreed would be permanent in 2005.
The court offers one further observation. Courts asked to grant injunctive relief (an equitable remedy) must, under appropriate circumstances, consider the “risk of harm to the public interest.” Brookline v. Goldstein, 388 Mass. 443, 447 (1983). The effect of non-competition agreements restricting the ability of employees, particularly moderately paid employees, to change jobs and the potential of such covenants to affect wages has been much in the news. See, e.g., “Corporate America is Suppressing Wages for Many Workers,” New York Times, Feb. 28, 2018. The Massachusetts legislature has been considering legislation restricting, to some extent, the use of non-competition clauses in employment contracts for some time. See,
e.g., “Noncompete contracts in Massachusetts? Lawmakers are near a deal,” Boston Globe, Jan. 15, 2018. The single, anecdotal reference in Medicus’ pleadings to one worker who had previously worked for Barton and was unable to accept employment at Medicus is insufficient to lead the court to modify the parties’ negotiated settlement agreement. However, future changes in the law reflecting new public policy regarding broad non-competes, like that incorporated in the Final Judgment, may be significant.
For the foregoing reasons, Medicus’ motion to modify the Final Judgment is DENIED.
Mitchell H. Kaplan
Justice of the Superior Court
Dated: February 28, 2018 read more


Posted by Massachusetts Legal Resources - March 8, 2018 at 11:32 pm

Categories: News   Tags: , , , , , ,

Massachusetts Bay Transportation Authority v. Clear Channel Outdoor, Inc. (Lawyers Weekly No. 09-017-18)

This lawsuit arises from the imminent expiration of a 15-year license agreement under which Clear Channel Outdoor, Inc., has been operating billboards on property owned by the Massachusetts Bay Transportation Authority. The MBTA recently issued a request for responses by parties willing to enter into a six month license to operate the same billboards after the current license expires. The MBTA received bids from Outfront Media LLC, which agreed to enter into a six-month license, and Clear Channel, which refused to accept a term that short. The MBTA disqualified Clear Channel. It then awarded a six-month license to Outfront Media.
The MBTA brought this suit seeking declarations that its request for responses was lawful, Clear Channel is not entitled to enforce its right of first refusal, and Clear Channel is contractually obligated to transfer the disputed billboards as well as whatever permits are needed to operate the billboards to the MBTA.
Clear Channel has asserted counterclaims alleging that the MBTA breached the existing contract by offering a new license on terms that are not commercially reasonable and by not allowing Clear Channel to exercise its contractual right of first refusal, and that Clear Channel therefore has no contractual obligation to transfer the billboard structures to the MBTA at the end of the current license term.
The MBTA now seeks a preliminary injunction that would bar Clear Channel from interfering with any use of the billboards on MBTA property, or terminating or otherwise disposing of its existing permits for billboards on MBTA property. Clear Channel seeks a preliminary injunction that would bar the MBTA from proceeding with the new license it has issued to Outfront Media or otherwise interfering with Clear Channel’s ownership of billboard structures and associated permits. The Court will ALLOW the MBTA’s motion and DENY Clear Channel’s motion.
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1. Legal Background.
1.1. The Public Interest in MBTA Advertising Revenues. The MBTA is a governmental entity, established by the Legislature as a “political subdivision of the commonwealth” that consists of 65 cities and towns within the MBTA’s service area. G.L. c. 161A, § 2 (political subdivision) & § 1 (defining the cities and towns within the “area constituting the authority”). The MBTA is now governed by the board of directors of the Massachusetts Department of Transportation. Id. § 3.
“The MBTA’s essential function is to provide mass transportation services” in the greater Boston metropolitan area. See Massachusetts Bay Transp. Auth. v. City of Somerville, 451 Mass. 80, 86 (2008).
The MBTA obtains most of its operating funds from taxes collected by the Commonwealth, fares paid by people who use the MBTA’s services, and assessments on cities and towns. See Boston Globe Media Partners, LLC v. Retirement Bd. of Mass. Bay Transp. Auth. Ret. Fund, Suffolk Sup. Ct. no. 1484CV01624, 33 Mass. L. Rptr. 374, 2016 WL 915300, at *9 (Mass. Super. Ct. 2016) (Salinger, J.); G.L. c. 10, § 35T (requiring portion of state sales tax revenue, plus assessments on cities and towns within the MBTA, to be deposited in Massachusetts Bay Transportation Authority State and Local Contribution Fund and disbursed to MBTA); G.L. c. 161A, § 9 (providing for assessments on cities and towns within the MBTA).
In addition, the Legislature has directed the MBTA to “establish and implement policies that provide for the maximization of nontransportation revenues from all sources.” G.L. c. 161A, § 11. For example, the Legislature has authorized the MBTA “[t]o sell, lease or otherwise contract for advertising in or on the facilities of the authority.” Id. § 3(n).
The MBTA is therefore “required by statute to maximize its revenues from commercial advertising,” including outdoor advertising on billboards and similar structures. MBTA v. Somerville, 451 Mass. at 86-87. This is because the “income that the MBTA generates, directly or indirectly, from commercial advertising in and on MBTA facilities and properties … is used by the MBTA to help defray the costs of its transportation operations.” Id. at 86. “These revenues also affect the fares charged by the MBTA, for the MBTA is generally to take ‘all necessary steps to maximize
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nontransportation revenues … before implementing fare increases.’ ” Id. at 87, quoting G.L. c. 161A, § 11. In sum, “[r]evenue raised through advertisements is statutorily integrated with the MBTA’s ability to provide mass transportation services, its essential function.” Id. at 87.
The Supreme Judicial Court has determined that any interference with the MBTA’s “ability to raise revenue” through commercial advertising on its property “would interfere with action that is related to the MBTA’s essential function.” Id.
1.2. Standards for Granting Preliminary Injunctive Relief. The MBTA and Clear Channel are seeking preliminary injunctions to enforce contractual rights allegedly established their 2003 license agreement regarding the use of billboard structures located on MBTA property. The parties’ current dispute arises from the MBTA’s solicitation of bids for and awarding of a new license. The MBTA contends that the bid process and award will help achieve the statutorily-mandated policy of maximizing non-transportation revenues discussed above. See G.L. c. 161A, § 11.
Under these circumstances, to obtain preliminary injunctive relief the moving party must prove that (1) it is likely to succeed on the merits of its claims, and (2) the requested relief will promote or at least will not adversely affect the public interest. See LeClair v. Town of Norwell, 430 Mass. 328, 331-332 (1999).
Unlike in lawsuits involving purely private interests, “a showing of irreparable harm is not required” because the MBTA is seeking “to enforce a statute or a declared policy of the Legislature.” Id. at 331 (designer selection statute); accord Fordyce v. Town of Hanover, 457 Mass. 248, 255 n.10 (2010) (public bidding statutes); Edwards v. City of Boston, 408 Mass. 643, 646-647 (1990) (uniform procurement act); Commonwealth v. Mass. CRINC, 392 Mass. 79, 89 (1984) (enforcement of bottle bill).
2. Findings of Fact. The Court makes the following findings based on the portions of the affidavits submitted by the parties that it finds credible, and on reasonable inferences it has drawn from those facts.
The Court does not credit Clear Channel’s affidavits to the extent they contain opinions regarding the commercial reasonableness of the MBTA’s recent request for responses for a new billboard license, or to the extent that they contain any other statements or opinions that are inconsistent with any of the findings or analysis in
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this decision. In deciding a motion supported by sworn affidavits, “the weight and credibility to be accorded those affidavits are within the judge’s discretion” and “[t]he judge need not believe such affidavits even if they are undisputed.” Commonwealth v. Furr, 454 Mass. 101, 106 (2009). An affidavit “is a form of sworn testimony the credibility of which is to be determined by the judge.” Psy-Ed Corp. v. Klein, 62 Mass. App. Ct. 110, 114, rev. denied, 442 Mass. 1114 (2004).
2.1. The Existing License. In 2003 the MBTA granted Clear Channel a 15-year license to operate billboards on MBTA property. That license will expire on March 3, 2018.1 The written license agreement also includes the following provisions, among others.
Clear Channel agreed to pay the MBTA 20 percent of the gross revenues that Clear Channel receives in exchange for providing outdoor advertising on most of the licensed billboards, and to pay 40 percent of gross revenues for a few other billboards, all subject to certain minimum guarantees. In practice, over the 15-year life of this contract Clear Channel has paid the MBTA roughly 34 percent of the gross revenue generated by these billboards, because the minimum annual guarantee has exceeded 20 percent of revenue each year.
The 2003 license provides (in ¶ 10) that if Clear Channel wanted to continue to use the billboard structures after the 15-year license term ended, and the MBTA “at its discretion” agreed, then Clear Channel would continue to have a license to use the billboards on a month-to-month basis. That month-to-month use could be terminated by either party at any time on sixty-days advance written notice. And the terms of the continuing month-to-month license would otherwise be the same as the 2003 license, except that the guaranteed minimum fee would increase by the same percentage increase in the specified consumer price index.
Clear Channel agreed (in ¶ 4.1 of the contract) that at the end of its license term it would transfer ownership of all of its structures located on T property to the MBTA. This obligation was subject to the condition that Clear Channel had “secure[d] 1 The parties previously submitted two different versions of their license, one stating that it after March 3, and the other saying March 5. At oral argument the MBTA represented that the parties have now agreed that the existing license term ends on March 3, 2018.
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the full and complete enjoyment of all rights granted by this License” for the original 15-year contract term. The contract provided that if the contract were terminated early, then Clear Channel would remove its structures from MBTA property.
The parties also agreed (in ¶ 4.2) what would happen if the MBTA opted not to extend the existing license. The contract provides that the MBTA may solicit bids or offers for a license of the billboard structures that are the subject of Clear Channel’s existing license. It specifies that the MBTA retains full discretion to solicit such bids or offers “under such terms and conditions” that the MBTA decides are “in the best interests of the MBTA.”
And the parties agreed that Clear Channel would have a right of first refusal as part of any bidding process for a successor license to use the billboard structures. The contract specifies that Clear Channel’s “right of first refusal is expressly conditioned on” Clear Channel “making an initial bid or offer in response to the MBTA’s solicitation and/or request for offers.” If Clear Channel satisfies this condition precedent, then before awarding any bid, or accepting any proposal to license the billboard structures, the MBTA must provide notice to Clear Channel “of all material terms and conditions offered by any such third person’s bid or proposal.” Clear Channel would then have three days “to notify the MBTA that it accepts each and every term and condition offered by such third person.” If Clear Channel were to do so, then the 2003 contract requires that Clear Channel “shall be awarded and be bound by a license with the same terms and conditions” offered by the other bidder.
Clear Channel has obtained from the Massachusetts Office of Outdoor Advertising all permits necessary to operate the MBTA billboards that are covered by the 2003 license. Some of these permits are for so-called “non-conforming” but “grandfathered” billboards that do not comply with current state or federal regulations but may nonetheless be permitted because they have been “continuously permitted … and utilized since their erection.” See 700 C.M.R. § 3.01 (definition of non-conforming and/or grandfathered sign).
2.2. The RFR Process. The MBTA retained a consultant in 2017 to help analyze how the MBTA could best maximize the revenues it earns from its billboard
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assets. The consultant advised that Clear Channel’s current license fee is “among the lowest in revenue return in the public sector.” It also told the MBTA that other public sector entities with similar billboard license arrangements “have minimum revenue share thresholds of 50% of gross revenues with some being as high as 70%.”
The MBTA decided that it did not want to extend Clear Channel’s existing license because the license fee was far too low. It also decided that it did not want to enter into a long-term license at this time, because it first wanted to evaluate the feasibility of converting existing static billboards to digital billboards.
The MBTA decided to seek proposals for a six-month contract, that the MBTA could extend in its discretion, in order to give it time to study the feasibility of digital billboards and to issue a new request for proposals for a digital contract if the MBTA decided that would be the best way to maximize its non-transportation revenues.
On November 29, 2017, the MBTA released Request for Response No. 150-17 (the “RFR”), which sought proposals to license and operate static billboards on MBTA properties.
The RFR specifies various terms for the new license. It proposes a license that would last for six months,2 with additional three-month terms available at the MBTA’s discretion. It explicitly requires that the new licensee must agree that, at the end of the license term, it will transfer all then-existing permits, advertising contracts, and related agreements for the billboards to the MBTA or its designee. The RFR also requires bidders to offer to pay the MBTA at least fifty percent of gross billboard revenues, and includes detailed requirements for information-sharing and reporting.
When the MBTA issued this RFR it reasonably anticipated that, if the new license were awarded to a company other than Clear Channel, the new licensee would be able to procure all necessary new permits from the Massachusetts Office of
2 In its counterclaim, Clear Channel expressly alleges that “the RFR proposes a license term of six months.” By law, Clear Channel is bound by its own factual allegations. See G.L. c. 231, § 87 (allegations “[i]n any civil action pleadings … shall bind the party marking them”). This statute provides that “facts admitted in pleadings” are “conclusive upon” the party making them. Adiletto v. Brockton Cut Sole Corp., 322 Mass. 110, 112 (1947).
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Outdoor Advertising to operate the licensed billboards either before the new license takes effect or shortly thereafter. The Court credits the testimony by the MBTA’s Deputy Director of Advertising that the MBTA understands and anticipates that a new licensee would be able to obtain permits for all of the licensed billboard sites even if they are non-conforming but grandfathered sites.3
The MBTA received two bids, one from Outfront Media LLC and one from Clear Channel.
Outfront agreed to accept all material terms set forth in the RFR. It offered to pay the MBTA 52.5 percent of gross billboard revenues during the contract term.
Clear Channel did not agree to the MBTA’s terms. To the contrary, Clear Channel indicated that it would not sign any new license with a six-month term and that it would not agree to transfer billboard permits to the MBTA or its designee at the end of the new license terms. Instead, Clear Channel proposed negotiating a longer term and proposed that it would transfer only new permits that it acquired during the term of the new license.
The MBTA informed Clear Channel that its proposal was not responsive because Clear Channel did not agree to comply with all terms and conditions specified in the RFR. The MBTA gave Clear Channel an opportunity to amend its bid to accept the six-month and permit-turnover requirements. Clear Channel declined to do so.
The MBTA then disqualified Clear Channel’s bid for failure to comply with material requirements.
On January 26, 2018, the MBTA awarded a new six-month license to Outfront Media. This license will take effect on March 4, 2018, immediately after Clear Channel’s existing license ends. The Court finds that both the MBTA and Outfront Media anticipate that whenever the new license terminates, Outfront Media will have obtained and thus will have to transfer to the MBTA or its designee permits to operate all of the licensed billboards.
3 See Declaration of Yanni Poulakis, ¶¶ 37-41. Clear Channel’s assertion during oral argument that the MBTA presented no evidence on this point is incorrect.
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The MBTA never gave Clear Channel any opportunity to exercise its right of first refusal. On the other hand, Clear Channel had already made clear that it would not accept the six-month and permit-transfer terms of Outfront’s proposal.
3. Likelihood of Success on the Merits. The Court concludes that: (i) the MBTA is likely to succeed on its claim that its request for responses was lawful, and Clear Channel is unlikely to succeed on its counterclaim that the RFR was commercially unreasonable and breached the implied covenant of good faith and fair dealing; (ii) the MBTA is likely to succeed on its claim that Clear Channel did not satisfy a condition precedent to the exercise of its right of first refusal, and Clear Channel is unlikely to succeed on its claim that the MBTA has committed a breach of contract by not giving Clear Channel the opportunity to exercise that right of first refusal; and (iii) the MBTA is likely to succeed on its claim that Clear Channel must comply with its contractual obligation to transfer the billboard structures to the MBTA.
3.1. Commercial Reasonableness of the Request for Responses. Clear Channel asserts that the MBTA violated its implied covenant of good faith and fair dealing by issuing a Request for Responses that included commercially unreasonable terms in a bad faith attempt to deprive Clear Channel of any meaningful opportunity to exercise its contractual right of first refusal. The Court is not convinced that Clear Channel has any likelihood of succeeding on this claim. To the contrary, the MBTA is likely to succeed in winning a declaration that its RFR is and was lawful.
3.1.1. The MBTA’s Duty to Offer Reasonable Terms. Like all contracts in Massachusetts, the parties’ 2003 license agreement includes an implied covenant of good faith and fair dealing. See, e.g., Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014). This implied covenant provides “that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract….” Id., quoting Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 385, 348 N.E.2d 763 (1976).
The MBTA has an obligation under the implied covenant to protect Clear Channel’s “ability to exercise its Right of First Refusal in an effective manner.” Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 381 (2004). In other words, the MBTA “was prohibited from obstructing” Clear Channel’s right
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of first refusal. Id. at 384. For example, the MBTA would violate the implied covenant of good faith if it solicited offers that include a “poison pill” provision designed solely to discourage Clear Channel from exercising its right of first refusal. See, e.g. Beckett v. Jewish Cemetery Ass’n of Mass., Middlesex Sup. Ct. Civ. no. 2007-1670-A, 28 Mass. L. Rptr. 100, 2011 WL 831676, * 5-*6 (Mass. Sup. Ct. 2011) (Wilkins, J.); David A. Bramble, Inc. v. Thomas, 914 A.2d 136, 149 (Md. 2007); Kennedy v. Dawson, 989 P.2d 390, 396-397 (Mont. 1999).
This does not mean that the MBTA was required to solicit offers on terms to which Clear Channel was willing to agree. To the contrary, the license agreement between Clear Channel and the MBTA specifies, in the same right-of-first-refusal provision upon which Clear Channel relies, that the MBTA could “publish a solicitation of bids” to license the billboards after Clear Channel’s contract expires “under such terms and conditions deemed to be in the best interests of the MBTA.”
This express contractual term is consistent with the common law rules that govern rights of first refusal. As courts in other jurisdictions have explained, “the owner of property subject to a right of first refusal remains master of the conditions under which he will relinquish his interest, as long as those conditions are commercially reasonable, imposed in good faith, and not specifically designed to defeat the preemptive rights.” Roeland v. Trucano, 214 P.3d 343, 350 (Alaska 2009), quoting West Texas Transmission, LP v. Enron Corp., 907 F.2d 1554, 1563 (5th Cir.1990) (applying Texas law).
Clear Channel’s assertion that two particular terms of the RFR were not commercially reasonable, were not imposed in good faith, and thus must have been designed to defeat Clear Channel’s right of first refusal is not convincing.
3.1.2. The Six-Month Term. To begin with, Clear Channel complains that the MBTA proposed a new license with a six-month term, rather than a license with a much longer duration. Clear Channel asserts that a six-month term is not commercially reasonable because a new licensee would not have sufficient time to obtain permits for the signs or to market and sign contracts for advertising on the signs, and could not secure more valuable, longer term contracts for the signs.
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If these criticisms were true, they would merely suggest that Clear Channel would have an unfair advantage in performing under a six-month extension—not an unfair disadvantage—because it already has permits for the signs, and (according to Clear Channel) it has already entered into long-term contracts that extend beyond the termination of its existing license agreement.
In any case, Outfront Media has agreed to a six-month license. It will therefore be hard for Clear Channel to establish that the MBTA’s request for responses was a charade, rather than a good faith effort to enter into a short, six-month lease of the billboards for reasons that make sense to the MBTA and Outfront even if they make no sense to Clear Channel. Clear Channel is unlikely to be able to show that terms that a competitor has agreed to accept are commercially unreasonable.
Furthermore, Clear Channel previously agreed, in the 2003 license, that come March 2018 Clear Channel could continue to operate under the existing license on a month-to-month basis if both side agreed. Given that Clear Channel previously agreed to potential month-to-month extensions, it is unlikely to succeed in proving that a six-month extension is designed solely to frustrate Clear Channel’s ability to exercise its right of first refusal.
The Court concludes that the MBTA is likely to succeed in proving that it acted in good faith to impose the six-month term, because it expects to need a relatively short amount of time to evaluate whether to seek to convert any existing billboard structures to electronic, digital displays. Clear Channel is therefore unlikely to succeed in showing that this provision was included in the RFR in bad faith, as a poison pill designed only to convince Clear Channel not to bid and therefore not to exercise its right of first refusal.
3.1.3. The Permit Transfer Provision. In addition, Clear Channel argues that it was unfair for the MBTA to require that any company wishing to bid on a new license must agree that, at the end of the license term, it will transfer to the MBTA all permits to operate billboard or sign structures on MBTA property. Clear Channel reasons that because it holds permits for all the existing MBTA structures, including some that are non-conforming but grandfathered, and a new licensee would necessarily start out with no permits for these structures, it necessarily follows that
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this requirement would unfairly force Clear Channel to relinquish something of great value that a new licensee does not have and cannot transfer. Once again, the Court is not persuaded.
As the Court found above, when it issued the RFR the MBTA reasonably anticipated and expected that any new licensee would be able to procure all necessary new permits to operate the licensed billboards, even with respect to structures that are non-conforming but grandfathered.
Thus, Clear Channel is unlikely to succeed in proving that the MBTA intended to unfairly disadvantage Clear Channel by including the permit-transfer condition in the RFR. To the contrary, it appears that the MBTA reasonably expects that by the end of the six-month term any new licensee would be in the same position as Clear Channel would be, i.e. holding permits to operate all of the billboard structures (including the non-conforming, grandfathered ones) that it would have to transfer to the MBTA or its designee at the conclusion of the new license term, as an agreed-upon condition of the license. The mere fact that Clear Channel has permits in place today, and Outfront does not, does not show that the permit-transfer condition is a bad faith attempt to disadvantage Clear Channel.
3.2. Clear Channel’s Right of First Refusal. The MBTA is likely to succeed on its claim that Clear Channel is not entitled to enforce its contractual right of first refusal because it did not satisfy a contractual condition precedent.
The 2003 license agreement provides that Clear Channel’s “right of first refusal is expressly conditioned on [Clear Channel] making an initial bid or offer in response to the MBTA’s solicitation and/or request for offers.”
The Court concludes that this provision unambiguously established a condition precedent to the exercise of Clear Channel’s right of first approval, the meaning of which is a question of law for the Court to decide. See generally Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002) (“If a contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.”); Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (“Whether a contract is ambiguous is also a question of law.”); Indus Partners, LLC v. Intelligroup, Inc., 77 Mass. App. Ct. 793, 795 (2010) (“ambiguity is not created
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simply because a controversy exists between parties, each favoring an interpretation contrary to the other’s.”) (Quoting Jefferson Ins. Co. v. Holyoke, 23 Mass. App. Ct. 472, 475 (1987)).
3.2.1. The Condition Requires a Responsive Bid. The Court construes this provision to mean that Clear Channel was required, as a condition of being able to exercise its right of first refusal, to submit a bid that was responsive to the MBTA’s RFR, in the sense that Clear Channel made a bid in which it agreed to accept all material terms and conditions set forth in the RFR.
Under Massachusetts law any government entity that undertakes a public bidding process must “consider only those bids that conform to the specifications issued,” even if the bidding process is not required or governed by statute. Cataldo Ambulance Service, Inc. v. Chelsea, 426 Mass. 383, 388 (1998) (imposing such a condition as a matter of common law “in the interest of fairness,” even though the Uniform Procurement Act exempts contracts for ambulance service from the statute’s requirements; see id. at 384 n.3, G.L. c. 30B, § 1(24)). After all, the whole point of a competitive bidding process “is ‘to establish genuine and open competition after due public advertisement in the letting of contracts for … (public) work, to prevent favoritism in awarding such contracts and to secure honest methods of letting contracts in the public interests.’ ” Datatrol Inc. v. State Purchasing Agent, 379 Mass. 679, 696 (1980), quoting Morse v. Boston, 253 Mass. 247, 252 (1925).
It would make little business sense for the parties to have agreed in their 2003 license agreement that Clear Channel must participate in the bid process as a condition for exercising its right of first refusal, but that a non-responsive bid in which Clear Channel rejects material terms of the RFR would count as participation. And the Court must construe this contract in manner that gives it “effect as … rational business instrument[s]” and that “will carry out the intent of the parties.” Robert and Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016)) (quoting Starr v. Fordham, 420 Mass. 178, 192 (1995)).
Furthermore, “[t]o allow a bidder to furnish his own specifications for any material part of the contract in question would destroy genuine and fair competition and be subversive of the public interests.” Datatrol, 379 Mass. at 697, quoting Sweezy
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v. City of Malden, 273 Mass. 536, 542 (1931). Thus, reading this provision in the manner advocated by Clear Channel would violate the principle that the Court must construe the parties’ contract in a manner that would promote and be consistent with the public interest, not in a way that subverts the public interest. See Department of Revenue v. Estate of Shea, 71 Mass. App. Ct. 696, 702, rev. denied, 451 Mass. 1109 (2008); Restatement (Second) of Contracts § 207 (1981).
3.2.2. Clear Channel’s Bid Was Not Responsive. Although Clear Channel submitted a bid in response to the MBTA’s recent RFR, Clear Channel expressly stated that it would not agree to a six-month license term and would not agree to transfer to the MBTA or its designee at the end of the license term any then-existing permits to operate the billboard structures. The terms that Clear Channel refused to accept were both material.
The MBTA gave Clear Channel a second chance to submit a responsive bid that would accept all of the material terms established in the RFR. Clear Channel refused to do so.
As a result, Clear Channel forfeited its right of first refusal. The submission of a responsive bid accepting all material terms of the MBTA’s RFR was a contractual condition precedent to the exercise of that right. The condition was not satisfied.
Clear Channel argues that “even if the 2003 License silently demanded a fully acquiescent response, Clear Channel was still within its rights to take the exceptions it did” because the terms it declined to accept were commercially unreasonable and designed in bad faith to keep Clear Channel from exercising its right of first refusal. This argument fails for the reasons discussed above. The MBTA is likely to succeed in showing that the six-month term and the permit-transfer requirement were commercially reasonable and not unfair to Clear Channel.
3.3. Clear Channel’s Obligation to Transfer the Billboards. The MBTA is likely to succeed on its claim to enforce Clear Channel’s contractual obligation to transfer the existing billboard structures to the MBTA at the end of the current license term. Conversely, Clear Channel is unlikely to succeed on its counterclaim that this contract provision is unenforceable.
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Clear Channel correctly notes that, under ¶ 4.1(a) of the 2003 license agreement, its obligation to transfer the billboard structures is only triggered “in the event that” Clear Channel “secures the full and complete enjoyment of all rights granted by this License” for the full fifteen year contract term.
Based on this language, Clear Channel then argues that it never enjoyed all rights granted by this License because the MBTA never gave Clear Channel an opportunity to exercise its contractual right of first refusal.
Clear Channel is unlikely to prevail on this issue. Clear Channel never had any right under the 2003 license agreement to exercise a right of first refusal without first submitting a fully responsive bid, which never occurred. As explained above, the right of first refusal was subject to a condition precedent, that Clear Channel submit a bid in which it agreed to accept all material terms and conditions set forth in the MBTA’s request for responses. Clear Channel never satisfied that condition. As a result, the first refusal provision never ripened into a right that Clear Channel was entitled to exercise. Cf. Louis M. Herman Co. v. Gallagher Elec. Co., 334 Mass. 652, 654 (1956) (where approval of architect and engineer was condition precedent to order becoming a contract, lack of such approval meant that order never ripened into a contract).
Since it appears likely that the MBTA will succeed in enforcing Clear Channel’s contractual obligation to transfer the billboard structures, it follows that the MBTA could likely show that any deliberate attempt by Clear Channel to interfere with the continued use of those structures by the MBTA’s new licensee for outdoor advertising—either by dismantling, removing, or otherwise disposing of the structures themselves, or by terminating Clear Channel’s existing permits to use those structures for outdoor advertising before the MBTA or its new license have a reasonable opportunity to seek and obtain new permits—would violate the implied covenant of good faith and fair dealing.
4. Public Interest. The MBTA has demonstrated that the preliminary injunctive relief that it seeks would promote the public interest, and that the preliminary relief sought by Clear Channel would adversely affect the public interest.
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The MBTA determined that the public interest is best served by soliciting proposals for, awarding, and implementing a six-month license to use billboard structures on its property, because doing so is the best way for the MBTA to comply with its statutory mandate to maximize the revenues generated from outdoor advertising. The Court finds that this determination had a reasonable basis in fact, was neither arbitrary nor capricious, and does not appear to be the result of any unlawful action.
Such a determination by a government entity “that the public interest is better served” by the action that some other party seeks to enjoin “should not be second guessed by a court,” except where that other party can shows that the determination was the result of “illegal or arbitrary action.” Siemens Bldg. Technologies, Inc. v. Division of Capital Asset Management, 439 Mass. 759, 765 (2003) (affirming denial of injunction sought by disappointed bidder because injunction barring contract award would adversely affect the public interest).
Since Clear Channel “has not overcome the substantial public interest that would be adversely affected” if the MBTA’s request for a preliminary injunction were denied or Clear Channel’s motion were granted, the Court “need not address at length the likelihood of irreparable harm” to either party. Id. Indeed, as explained above, in a case like this the issuance of a preliminary injunction turns on the parties’ likelihood of success and what furthers the public interest, without considering claims of irreparable harm. See, e.g., Fordyce v. Town of Hanover, 457 Mass. 248, 255 n.10 (2010); LeClair v. Town of Norwell, 430 Mass. 328, 331-332 (1999).
5. Summary as to Appropriate Relief. For the reasons discussed above, the Court concludes in the exercise of its discretion that it will deny Clear Channel’s motion for a preliminary injunction but allow the preliminary relief sought by the MBTA. Cf. Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014) (“Trial judges have broad discretion to grant or deny injunctive relief.”).
Clear Channel is not entitled to a preliminary injunction because it is unlikely to succeed on the merits of its counterclaims. See Fordyce, 457 Mass. at 266-267 (vacating preliminary injunction because plaintiffs were “unlikely to succeed on the merits”).
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Conversely, the MBTA is likely to succeed on its claims and the limited relief it seeks by way of preliminary injunction would be in the public interest because it would allow the MBTA and Outfront Media to implement their new license agreement, including by seeking new permits to use the billboard structures on MBTA property for outdoor advertising.
Since the MBTA is likely to succeed on its claim that Clear Channel is obligated to transfer the billboard structures to the MBTA as of March 4, it makes sense to enjoin Clear Channel from dismantling, removing, disposing of, or interfering with any use of those structures.
At oral argument Clear Channel made clear that it does not oppose the other relief sought by the MBTA in its preliminary injunction motion, because it agrees that both the public interest and the interests of all parties are best served by Clear Channel keeping its current permits for using the disputed structures in place. If Clear Channel were ultimately to prevail on its counterclaims, it would all of its existing permits still to be in place. The Court concludes that it is in the public interest that Clear Channel be enjoined from doing anything to terminate or dispose of those permits, in part so that the MBTA and its new licensee will have a reasonable opportunity to seek new permits before the existing ones lapse or are revoked by the permitting authority.
The MBTA need not post any bond, since “[n]o such security shall be required … of a political subdivision of the Commonwealth.” Mass. R. Civ. P. 65(c).
The motion for preliminary injunction filed by the Massachusetts Bay Transportation Authority is ALLOWED. The preliminary injunction motion filed by Clear Channel Outdoor, Inc., is DENIED.
February 23, 2018
Kenneth W. Salinger
Justice of the Superior Court read more


Posted by Massachusetts Legal Resources - March 2, 2018 at 2:57 am

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