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Silva v. Todisco Services, Inc. (Lawyers Weekly No. 12-006-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV02778-BLS2
____________________
CHRISTOPHER SILVA, on behalf of himself and all others similarly situated
v.
TODISCO SERVICES, INC. d/b/a Todisco Towing
____________________
MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
Todisco Towing towed Christopher Silva’s motor vehicle without Silva’s consent from a private parking lot in Salem, Massachusetts, to East Boston. The Todisco invoice says this was a “trespass” tow, which presumably means that the vehicle was towed at the request of the property owner or manager because it was parked there illegally in violation of a posted notice. Cf. G.L. c. 266, § 120D. Silva says Todisco charged him $ 169.00, including a $ 90.00 towing charge; a $ 42.00 mileage charge; a $ 35.00 storage charge; and a $ 2.00 fuel surcharge.
Silva alleges that the mileage charge and fuel surcharge were illegal because Todisco’s invoice or tow slip did not include information required by 220 C.M.R. § 272.03, a regulation promulgated by the Department of Public Utilities (“DPU”) that establishes maximum rates for towing vehicles. Silva asserts claims for negligent misrepresentation, intentional fraud, unjust enrichment, violating G.L. c. 93A, and declaratory judgment. He also seeks to represent a class consisting of all people whose motor vehicles were towed by Todisco and were charged a mileage fee or fuel surcharge when Todisco did not record the required information on the tow slip. Silva seeks monetary compensation for damages, punitive damages under c. 93A, equitable relief, and declaratory relief on behalf of himself and the putative class members.
Todisco moves to dismiss this action on the grounds that Silva lacks standing, the DPU has primary jurisdiction, the statute authorizing a fine for violating the tow charge regulation bars any other relief, the cited regulation did not require Todisco to disclose any information, the claims for misrepresentation and fraud cannot be decided on a class-wide basis, and the claims for misrepresentation and fraud and under G.L. c. 93A are all preempted by federal law. The Court concludes that none of these arguments justifies dismissal. It will therefore DENY the motion to dismiss.
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1. Standing. Todisco asserts that Silva lacks standing to bring this action because the allegations in the complaint establish that Todisco’s alleged wrongdoing did not cause Silva himself to suffer any injury. This argument is without merit.
Todisco correctly points out that the complaint alleges that Nathan Silva went to East Boston to retrieve the towed vehicle and paid the $ 169.00 total charge demanded by Todisco.
But the complaint also alleges that Nathan paid the towing charges imposed by Todisco on behalf of Christopher Silva, Nathan was acting as Christopher’s agent, Christopher is the one who actually paid the amount charged by Todisco, and therefore Christopher (not Nathan) is the one who suffered financial harm as a result of Todisco imposing towing charges that were not allowed under 220 C.M.R. § 272.03.
Those allegations plausibly suggest that Todisco breached a legal duty owed to Silva by charging more for an involuntary tow than permitted by law, that Silva himself was injured by Todisco’s actions, and that Silva therefore has standing to bring this action. See G.L. c. 93A, § 9(1) (any person injured by unfair or deceptive act or practice in trade or commerce may bring action in superior court for damages and equitable relief); Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15, 22-23 (2007) (plaintiff has standing if allegations in complaint plausibly suggest that defendant owed legal duty to plaintiff, breached that duty, and plaintiff suffered injury as a result). Silva was not required to allege in more detail facts showing that Nathan was acting as Silva’s agent and paid Todisco on behalf of Silva. See, e.g., Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (“detailed factual allegations are not required”); Cannonball Fund, Ltd. v. Dutchess Capital Mgmt., LLC, 84 Mass. App. Ct. 74, 93-95, rev. denied, 466 Mass. 1106 (2013) (plaintiff’s standing is determined based on factual allegations in complaint, assuming them to be true).
2. Primary Jurisdiction. Todisco asserts that the DPU has primary jurisdiction over Silva’s claims, and that the Court should therefore dismiss this action. “The doctrine of primary jurisdiction arises in cases where a plaintiff, ‘in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy’ that includes an issue within the special
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competence of an agency.” Fernandes v. Attleboro Hous. Auth., 470 Mass. 117, 121 (2014), quoting Murphy v. Administrator of the Div. of Personnel Admin., 377 Mass. 217, 220 (1979). This doctrine “has particular applicability when ‘an action raises a question of the validity of an agency practice … or when the issue in litigation involves “technical questions of fact uniquely within the expertise and experience of an agency.” ’ ” Id. (ellipsis in original), quoting Murphy, supra, at 221, quoting in turn Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 304 (1976).1
The DPU and the Superior Court share jurisdiction over claims that a towing company has violated the Department’s towing rate regulation. Since Silva’s vehicle was towed at the request of the owner or operator of the property where the vehicle had been parked, and without the consent of Silva or any authorized user of the vehicle, Todisco could not charge Silva any more than the maximum amount allowed for such involuntary tows under the applicable DPU regulations. See G.L. c. 266, § 120D. All of Silva’s claims are based on his allegation that Todisco imposed towing charges for mileage and a fuel surcharge without providing information required under 220 C.M.R. § 272.03. This regulation was adopted by the Department pursuant to its authority under G.L. c. 159B, § 6B, to regulate the maximum charges that may be assessed for the involuntary towing of motor vehicles. Anyone affected by a violation of this regulation “may file” a complaint with the Department. G.L. c. 159B, § 21. But this jurisdiction is not exclusive. See Papetti v. Alicandro, 317 Mass. 382, 385-390 (1944). The governing statute provides that the Superior Court retains “jurisdiction in equity to restrain any … violation” of regulations promulgated this statute. See G.L. c. 159B, § 21. In addition, individuals like Silva who contend they have been overcharged may file an action in Superior Court seeking repayment, just
1 The doctrines of exhaustion of administrative remedies and primary jurisdiction serve similar purposes but apply in different circumstances. See Liability Investigative Effort, Inc. v. Medical Malpractice Joint Underwriting Ass’n of Massachusetts, 409 Mass. 734, 750-751 (1991). “The doctrine of exhaustion of administrative remedies contemplates a situation where some administrative action has begun, but has not yet been completed; where there is no administrative proceeding under way, the exhaustion doctrine has no application. In contrast, primary jurisdiction situations arise in cases where a plaintiff, in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy.” Id., quoting Murphy, 377 Mass. at 220.
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as carriers or towers who contend they are owed money under this regulation may file a civil action seeking payment. Cf. Papetti, supra, at 391-393.
Where a lawsuit involves a dispute over which a court and an administrative agency share jurisdiction, as in this case, the court generally has broad discretion as to whether to allow the lawsuit to proceed or instead dismiss or stay the action and refer issues to the agency under the doctrine of primary jurisdiction. See Blauvelt v. AFSCME Council 93, Local 1703, 74 Mass. App. Ct. 794, 801-802 (2009).
But Silva seeks damages and other relief under G.L. c. 93A, § 9. That makes it inappropriate to dismiss or even to stay this case on the ground that the DPU has primary jurisdiction over this dispute.
By statute, individuals who are “entitled to bring an action” under G.L. c. 93A, § 9, “shall not be required to initiate, pursue or exhaust” any administrative remedies before filing suit or obtaining relief under c. 93A in court. See G.L. c. 93A, § 9, ¶ (6). This provision bars courts from dismissing or staying a § 9 claim on the ground that the plaintiff should first seek relief in some other forum. Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826 (1982). It was added to c. 93A to reverse a contrary ruling by the Supreme Judicial Court. In 1972 the SJC held that an individual claiming he was overcharged by an insurer had to exhaust his administrative remedies before the Commissioner of Insurance before filing suit in Superior Court under c. 93A. See Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 585-588 (1972). The Legislature responded to Gordon by enacting “St.1973, c. 939, which amended G.L. c. 93A, s 9, so as to obviate, except in specified cases, the requirement that administrative remedies be exhausted before relief can be granted under c. 93A.” Slaney v. Westwood Auto, Inc., 366 Mass. 688, 691 n.4 (1975).
Although courts retain some discretion to stay § 9 claims to give the defendant the opportunity to initiate a proceeding before an administrative agency, by statute they may do so “only in certain limited circumstances.” Hannon, supra. Specifically, the Legislature has authorized such a stay only if: (a) “there is a substantial likelihood” that the court case could result in an order “that would disrupt or be inconsistent with a regulatory scheme” that applies to the conduct at issue in the case, or (b) the regulatory agency “has a substantial interest in reviewing” the conduct
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at issue and also “has the power to provide substantially the relief sought[.]” G.L. c. 93A, § 9, ¶ (7).
Neither of these statutorily-permissible reasons for staying claims applies in this case. Since Silva seeks an order compelling Todisco to comply with the regulatory scheme that governs involuntary tows, there is little chance that Silva will obtain an order requiring Todisco to do anything inconsistent with the regulatory scheme. And the DPU “lacks authority to order” Todisco to repay “a collected overcharge to customers” or to award the other relief sought by Silva under c. 93A. See Southbridge Water Supply Co. v. Dept. of Pub. Utils., 368 Mass. 300, 310 (1975).
Nor does it make any sense to stay Silva’s common law claims. As the Court just noted, the DPU “is not authorized to order reimbursement of collected charges to customers.” See Lowell Gas Co. v. Attorney Gen., 377 Mass. 37, 45 (1979). Furthermore, the question of whether Todisco is charging fees not allowed under the DPU’s towing charge regulations turns on questions of regulatory interpretation that Superior Court judges deal with regularly; it is not a highly technical issue that cannot be understood and fairly resolved without the Department’s specialized expertise. Under these circumstances, Silva should be allowed to press his claim and the putative class claims in court. “This is not a case in which the proper allocation of responsibilities between the courts and an administrative agency calls for judicial forbearance until agency action occurs.” See Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60, 61-62 (1999) (Superior Court properly retained jurisdiction over counterclaims that provider violated G.L. c. 93A, § 11, by overcharging for chiropractic services, rather than deferring to primary jurisdiction of Board of Registration of Chiropractors, where board had “no authority to award G.L. c. 93A damages” and overcharging claim was “not a complicated issue calling for agency expertise”).
3. Availability of Compensatory Remedy. Todisco notes that the DPU may impose a $ 100 fine to punish a violation of the towing charge regulation. See G.L. c. 159B, § 21. Todisco then asserts that this fine is the exclusive remedy and that Silva may not seek compensatory damages or injunctive relief on behalf of himself or the putative class. This argument is without merit.
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Nothing in § 21 provides or even suggests that courts are barred from ordering repayment of overcharges, punitive damages and attorneys’ fees under c. 93A, or appropriate injunctive relief as a remedy for a violation of this regulation. Cf. J. & J. Enterprises, Inc. v. Martignetti, 369 Mass. 535, 539 (1976) (statute authorizing Alcoholic Beverages Control Commission to impose fine did not create exclusive remedy that would bar court from awarding damages, injunctive relief, and other relief under c. 93A). To the contrary, and as noted above, the power of the DPU to enforce the towing charge regulations is not exclusive. See Papetti, 317 Mass. at 385-390; G.L. c. 159B, § 21. The mere fact that the Legislature authorized imposition of a small fine does not, by itself, make that the exclusive remedy. See Labor Relations Comm’n v. Boston Teachers Union, Local 66, 374 Mass. 79, 92-93 (1977).
4. Legal Obligation to Disclose Mileage and Fuel Information. Todisco next asserts that Silva’s claim fails as a matter of law because nothing in the governing regulation required Todisco to disclose odometer and fuel surcharge information to the customer before imposing and collecting mileage and fuel charges for an involuntary tow. This argument is also without merit.
The regulation cited by Silva expressly required Todisco to provide customers like Silva with the information at issue. With respect to the mileage charge, the regulation provides that the charge is to be “based on round trip mileage from garage to return thereto,” that the towing companying is to “establish the mileage from the service vehicle odometer,” and that it “must include the odometer readings on the tow slip.” See 220 C.M.R. § 272.03, Note 3. With respect to the fuel surcharge, the regulation states that “the towing slip must record” certain specified information. Id., “Fuel Price Surcharge,” ¶ 6. By requiring that certain information be included on the tow slip, the regulation makes clear that this information must be disclosed and provided to the customer.
5. Amenability to Class Certification. Todisco argues that Silva should not be allowed to assert claims for intentional fraud or negligent misrepresentation on behalf of the putative class because the question of actual reliance cannot be decided on a class-wide basis. This argument is premature. Silva has not yet moved for class certification. The proper time to raise this argument is in response to a motion to
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certify the class, which Silva is not required to serve or file at this time. Cf. Massachusetts General Hospital v. Rate Setting Commission, 371 Mass. 705, 713 (1977) (unlike parallel federal rule, Mass. R. Civ. P. 23 does not require that class certification be decided at outset of case).
6. Federal Preemption. Todisco argues that Silva’s claims for intentional fraud, negligent misrepresentation, and violation of the Massachusetts Consumer Protection Act (G.L. c. 93A) are preempted by the Federal Aviation Administration Authorization Act, which bars states from regulating any “price, route, or service of any motor carrier … with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).
This argument fails because it cannot be squared with a separate provision of this federal law. Congress provided that the preemption provision relied upon by Todisco “does not apply to the authority of a State or a political subdivision of a State to enact or enforce a law, regulation, or other provision relating to the regulation of tow truck operations performed without the prior consent or authorization of the owner or operator of the motor vehicle.” Id. § 14501(c)(2)(C). Since Silva’s vehicle was towed without the prior consent or authorization of the vehicle owner or operator, the Commonwealth of Massachusetts is free to regulate the charges imposed by Todisco without running afoul of the FAAAA preemption provision. As a result none of Silva’s claims is preempted. See Tillison v. Gregoire, 424 F.3d 1093, 1100 (9th Cir. 2005) (state regulations that “impact the prices operators charge for non-consensual towing” are “saved from preemption by the exception in FAAAA which allows such regulation of prices”); State v. Transmasters Towing, 168 P.3d 60, 66 (Kansas Ct. App. 2007) (claims under Kansas Consumer Protection Act that charges for involuntary tows were excessive not preempted by FAAAA, in part because they fall within preemption exception of § 14501(c)(2)(C)).
7. Declaratory Relief. Finally, since Silva’s other claims survive the motion to dismiss, his claim seeking declaratory relief under G.L. c. 231A does as well. As explained above, the pleadings in this case make clear that there is an actual controversy between the parties regarding whether the towing charges imposed by Todisco were lawful, and Silva has standing to seek relief. Nothing more is needed to
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state a claim for declaratory relief. See, e.g., Galipault v. Wash Rock Investments, LLC, 65 Mass. App. Ct. 73, 83 (2005).
ORDER
Defendant’s motion to dismiss this action is DENIED. The Court will conduct a scheduling conference under Mass. R. Civ. P. 16 on February 21, 2017, at 2:00 p.m.
23 January 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - February 3, 2017 at 3:42 pm

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Whittier IPA, Inc. v. Steward Health Care Network, Inc. (Lawyers Weekly No. 12-005-17)

ΔCOMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1484CV03029-BLS2
____________________
WHITTIER IPA, INC.
v.
STEWARD HEALTH CARE NETWORK, INC.
____________________
MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION FOR LEAVE TO ASSERT COUNTERCLAIMS AGAINST WHITTIER IPA, INC., AND THIRD-PARTY CLAIMS AGAINST ANNA JACQUES HOSPITAL
Steward Health Care Network, Inc., (“SHCN”) is a physician network. It negotiates and implements contracts with insurers and other entities that pay for SHCN’s participating doctors to provide medical care to the payors’ insureds or members. Whittier IPA, Inc., is an association of independent physicians. It joined the SHCN network in January 2012, but began exploring other options in 2013. After SHCN learned that Whittier had agreed to join a competing physician network run by the Beth Israel Deaconess Care Organization (“BIDCO”), SHCN terminated its agreements with Whittier effective August 31, 2014.
Whittier claims that is still owed substantial sums by SHCN under the parties’ contracts. The court (Kaplan, J.) granted partial summary judgment in Whittier’s favor in June 2015, declaring that if SHCN received incentive payments from health insurers and other payors for periods during which Whittier was an SHCN member, then “SHCN breached its contract with Whittier by failing to pay Whittier its pro rata share of those payments.” The amount that SHCN must pay Whittier is still in dispute. The current case schedule, which was jointly requested by both parties, requires the litigants to complete all fact discovery by February 10, 2017, and to complete the exchange of any expert reports by March 24, 2017.
SHCN seeks leave to assert counterclaims against Whittier and third-party claims against Anna Jacques Hospital. The Court will DENY this motion. It would be futile to allow SHCN to assert its proposed counterclaims against Whittier for breach of contract because they could not survive a motion to dismiss. The proposed claims against Anna Jacques for intentional interference and allegedly violating G.L. c. 93A would also be futile. In any case, it would be unfairly prejudicial to
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Whittier and to Anna Jacques to allow permissive joinder of a new defendant-in-counterclaim under Mass. R. Civ. P. 20 just weeks before the completion of discovery in this case. SHCN has no right to join Anna Jacques as a defendant-in-counterclaim under Rule 19 and does not seek to assert third-party claims for indemnification or contribution as allowed under Rule 14.
1. Proposed Counterclaims Against Whittier. SHCN seeks leave to assert counterclaims against Whittier for allegedly breaching parts of its written contracts with SHCN. The Court will deny leave to assert these counterclaims because doing so would be futile, in that these counterclaims could not survive a motion under Mass. R. Civ. P. 12(b)(6) to dismiss for failure to state a claim upon which relief can be granted. See generally Johnston v. Box, 453 Mass. 569, 583 (2009) (“Courts are not required to grant motions to amend prior [pleadings] where ‘the proposed amendment … is futile.’ ” (quoting All Seasons Servs., Inc. v. Commissioner of Health & Hosps. of Boston, 416 Mass. 269, 272 (1993)); Thermo Electron Corp. v. Waste Mgmt. Holdings, Inc., 63 Mass. App. Ct. 194, 203 (2005) (affirming denial of motion for leave to assert counterclaim that would have been futile); Mancuso v. Kinchla, 60 Mass. App. Ct. 558, 572 (2004) (if amendment to add claim could not survive motion to dismiss, allowing amendment would be exercise in futility).
1.1. Contract Provisions. When Whittier agreed in October 2011 to join the SHCN network, the parties executed and entered into a written “Service Agreement” and a related “Letter Agreement.” The following provisions of the parties’ contracts are relevant.
1.1.1. Exclusivity Provisions. In the Service Agreement, Whittier granted SHCN exclusive authority to negotiate and enter into “Risk Contracts” on behalf of Whittier and its physicians, and gave SHCN “a limited right of first opportunity … to negotiate and enter into Risk Contracts” on behalf of all of Whittier’s physicians, during the term of the contract. Whittier also agreed that its doctors who work as primary care physicians would not “participate in any Risk Contract with any Payor” other than through SHCN. The term “Risk Contract” was defined to mean an agreement with a “Payor” regarding the provision of and payment for medical services. The term “Payor” was defined to mean insurers and
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other private or governmental entities that pay for medical services provided to enrolled individuals.
SHCN acknowledged in the Letter Agreement that, as of the time SHCN and Whittier entered into their contractual relationship, Whittier was contractually obligated to give a competitor of SHCN called the Lower Merrimack Valley Physician Hospital Organization, Inc. (or “LMVPHO”) “a right of first opportunity to negotiate payor contracts on behalf of Whittier and Whittier Physicians.” SHCN agreed that all the terms of its Service Agreement with Whittier, including the exclusive representation and right of first opportunity provisions, were subject to Whittier’s pre-existing obligation to LMVPHO and thus would not have any effect until Whittier was able to terminate its obligations to LMVPHO.
1.1.2. Termination Provisions. The initial term of the Service Agreement was five years, beginning January 1, 2012. But SHCN and Whittier agreed that their contractual arrangements could “be terminated by either party, with or without cause, at any time upon ninety (90) days prior written notice to the other party.” The Letter Agreement provided that if the Service Agreement were terminated by either party then Whittier would have the right to terminate its participation in any existing contract with a third-party payor and would not be obligated to participate in any contract with a third-party payor that SHCN entered into or renewed after the date of the termination notice.
1.1.3. Confidentiality Provision. The SHCN Service Agreement also contained a provision that addressed “proprietary information.” This provision imposed a number of obligations, including that “[t]he parties shall … hold in strict confidence any information specified in writing by any party hereto as confidential information.”
This contract specifies in the first paragraph that it was “made and entered … by and between” SHCN and Whittier, which means that they are the “parties” referred to in the confidentiality provision. The contract expressly distinguishes between Whittier (which it calls the “IPA” because it is an independent physician association) and the physicians who are members of Whittier (which it calls the “IPA Participating Providers”).
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1.2. Claim for Breach of Exclusivity Provisions. Count I of SHCN’s proposed counterclaim would assert a claim that Whittier violated the exclusivity and right of first opportunity provisions of the SHCN Service Agreement by negotiating and then entering into a contract with BIDCO. In late 2013 Whittier negotiated an agreement to join BIDCO’s network of participating physicians. Whittier and BIDCO executed a letter agreement to that effect on December 6, 2013. This written contract specifies that its effective date would be the date on which the physician members of Whittier “become participating providers in the Risk Contracts” between BIDCO and three specified health insurers.1 The same paragraph obligates BIDCO to “use it reasonable best efforts” to have the Whittier physicians begin participating in those Risk Contract “as of January 1, 2014.” At the time that Whittier entered into this contract with BIDCO it was still part of the SHCN network and still bound by the SHCN Service Agreement.
Count I could not survive a motion to dismiss because the proposed counterclaim does not allege facts plausibly suggesting that Whittier breached the exclusivity and first opportunity provisions of its contract with SHCN by negotiating a possible move to BIDCO and then agreeing to do so. To determine whether a party has stated a legally viable claim, a court must “look beyond the conclusory allegations in the complaint and focus on whether the factual allegations plausibly suggest an entitlement to relief.” Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, 473 Mass. 336, 339 (2015), quoting Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011); accord Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008).
The exclusivity and first opportunity provisions of the SHCN Service Agreement do not apply to the new contract that Whittier entered into with BIDCO. To the contrary, they only apply to “Risk Contracts” with health insurers and other “Payors.” The term “Risk Contract” is defined as “[a]n agreement between SHCN or [Whittier] and a Payor” under which SHCN or Whittier “agrees to arrange for and coordinate the provision of” health care services to individuals enrolled in a health
1 Blue Cross and Blue Shield of Massachusetts, Inc.; Harvard Pilgrim Health Care; and Tufts Health Plans, Inc.
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benefit plan of some kind, “and the Payor agrees to pay for” such services. The term “Payor” is defined to mean “[a] health maintenance organization, preferred provider arrangement, insurance company or carrier, employer, employer self-insured health benefit plan or trust, or governmental entity” that is obligated to pay for medical care covered by a health insurance policy or other health benefit plan. Networks of health care providers such as BIDCO or SHCN are not “Payors” as that term is defined in the Service Agreement. They negotiate with Payors, and manage and implement contracts under which Payors agree to compensate health care providers who participate in that network, but they do not insure or provide analogous benefits to individuals and thus are not “Payors.” The contract that Whittier entered into with BIDCO is therefore not a “Risk Contract” as SHCN defined that term in the Service Agreement.
SHCN cannot create a viable claim for breach of contract merely by making the conclusory and incorrect assertion that the Whittier/BIDCO letter agreement is a “risk contract.” See generally Maling, 473 Mass. at 339. The interpretation of the parties’ unambiguous written contracts “is a question of law” that the court may resolve when deciding whether a party has asserted a viable contract claim. See, e.g., Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (affirming dismissal of complaint for failure to state a viable claim for breach of contract). Similarly, whether language used in a contract “is ambiguous is also a question of law for the court.” Berkowitz v. President & Fellows of Harvard College, 58 Mass. App. Ct. 262, 270, rev. denied, 440 Mass. 1101 (2003) (ordering dismissal of complaint for failure to state a viable claim for breach of contract). Where the material provisions of a contract are unambiguous, as they are here, a court “cannot accept the bare assertion in the plaintiff’s complaint” that the opposing party violated the contract, when that assertion is based on a misreading of the contract. Eigerman, supra; accord Flomenbaum v. Commonwealth, 451 Mass. 740, 751-752 & n.12 (2008) (granting motion to dismiss contract claim because plain language of contract made clear that Commonwealth could terminate chief medical examiner before completion of full five year term).
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Whittier had the absolute contractual right to terminate its contracts with SHCN on ninety days’ notice, without needing to show good cause or provide any reason for doing so. And it retained the right to negotiate a successor agreement with a different network like BIDCO before giving SHCN any notice of termination. Doing so did not violate BIDCO’s “first opportunity” rights any more than SHCN’s prior negotiations to bring Whittier into its network violated the “first opportunity” rights that Whittier had previously granted to LVMPHO, which is yet another competing network of providers. SHCN’s assertion in its reply memorandum that BIDCO was negotiating risk contracts with an insurance payor while Whittier was still affiliated with SHCN, and was doing so with the expectation that Whittier’s physicians would participate in those risk contracts if Whittier left SHCN and joined BIDCO, is beside the point. The documents provided by SHCN show that BIDCO was negotiating with Tufts Health Plan on behalf of whatever physicians may affiliate themselves with BIDCO, but was not committing Whittier physicians to anything. That did not violate Whittier’s obligations to SHCN.
It would be improper to construe the exclusivity and first opportunity provisions in the SHCN Service Agreement “in isolation,” without considering Whittier’s right to terminate the contract and join a different provider network; instead, the Court must consider the meaning of the provisions that SHCN claims were breached “in the context of the entire contract.” General Convention of the New Jerusalem in the United States of Am., Inc. v. MacKenzie, 449 Mass. 832, 835 (2007). The Court must construe the Service Agreement as a whole in a manner that will “give it effect as a rational business instrument and in a manner which 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). And “the parties’ intent ‘must be gathered from a fair construction of the contract as a whole and not by special emphasis upon any one part.’ ” Kingstown Corp. v. Black Cat Cranberry Corp., 65 Mass. App. Ct. 154, 158 (2005), quoting Ucello v. Cosentino, 354 Mass. 48, 51 (1968), and Crimmins & Peirce Co. v. Kidder Peabody Acceptance Corp., 282 Mass. 367, 375 (1933).
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Whittier’s contractual right to terminate its relationship with SHCN would have little practical meaning if the exclusivity and first opportunity provisions were construed to bar Whittier from negotiating a new contractual arrangement with a successor network, and from making sure that the new network had the necessary relationships with health insurers so that Whittier physicians could continue to treat their current patients, before terminating its contract with SHCN.
1.3. Claim for Breach of Confidentiality Provisions. Count II of SHCN’s proposed counterclaim would assert a claim that Whittier violated the confidentiality provision of the SHCN Service Agreement “by disclosing to Anna Jacques SHCN’s confidential and proprietary business information.” The counterclaim alleges that Whittier “disclosed to Anna Jacques confidential information concerning annual payments SHCN made to Whittier.” It also asserts, “[o]n information and belief, [that] Whittier disclosed other confidential SHCN information to Anna Jacques or BIDCO.”2
It would be futile to assert this counterclaim because the disclosure of confidential information, without more, would not violate the Service Agreement. The relevant contract provision only required Whittier to “hold in strict confidence any information specified in writing by any party hereto as confidential information.” Thus, Whittier would not have breached the contract by disclosing arguably confidential information if SHCN never “specified in writing” that this was the kind of information that SHCN considered to be confidential. But the proposed counterclaim does not allege any facts plausibly suggesting that Whittier disclosed any information that SHCN “specified in writing” was confidential.
In its reply memorandum, SHCN argues in effect that it could amend its proposed counterclaim to allege that in May 2013 SHCN issued written policies to its participating providers (including, presumably, Whittier’s physicians) stating in part that “[a]ll materials distributed from SHCN to provider and provider’s staff are
2 “For purposes of surviving a motion to dismiss, … a party may allege facts based on ‘information and belief’ ” and the court must “assume the truth of such allegations.” Polay v. McMahon, 468 Mass. 379, 383 n.5 (2014) (partially reversing Rule 12(b)(6) dismissal).
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confidential and proprietary and shall not be disclosed to any party without the express written consent from SHCN.” This would also be futile.
Adding this new allegation would still not plausibly suggest that Whittier was ever put on written notice that SHCN considered any of the information that it sent to Whittier to be confidential. Whittier is not a “provider” within the meaning of that policy, or under the Service Agreement. The policy makes clear that the “providers” it covers are individual physicians; that is why the policy requires all SHCN providers to “be in good standing on the medical staff at a Steward affiliated hospital.” Similarly, the Service Agreement distinguishes between Whittier (which it calls the “IPA,” or independent physician association) and the individual physician “providers.” Assuming that the May 2013 police provided sufficient notice to individual physicians that anything and everything they received from SHCN was confidential, even if in fact it was purely public information, such a notice to physician providers does not constitute written notice that information received by Whittier regarding payments made to it by SHCN—or any other information conveyed by SHCN—had to be treated as confidential information.
1.4. Claim for Breach of Implied Covenant. Count III of SHCN’s proposed counterclaim would assert a claim that Whittier violated the implied covenant of good faith and fair dealing that is part of the contracts between SHCN and Whittier. More specifically, SHCN alleges that Whittier violated the implied covenant by disclosing SHCN’s confidential business information to Anna Jacques, and by negotiating with SHCN to revise its payment obligations to Whittier without disclosing that Whittier had been negotiating with BIDCO.
It would be futile for SHCN to assert a counterclaim that Whittier breached the implied covenant by disclosing confidential information. As discussed above, SHCN has not alleged facts plausibly suggesting that Whittier violated the confidentiality provision of the Service Agreement. Invoking the implied covenant adds nothing to the proposed claim under the express confidentiality provision, because the implied covenant “does not create rights or duties beyond those the parties agreed to when they entered into the contract.” Boston Med. Ctr. Corp. v.
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Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 460 (2012) (affirming dismissal of claim), quoting Curtis, 458 Mass. at 680.
It would similarly be futile to assert that Whittier breached the implied covenant by negotiating contract revisions with SHCN before disclosing its agreement with BIDCO. An alleged misrepresentation in the course of negotiating a contract or a contract amendment does not implicate this implied covenant, because “this covenant pertains to bad faith in the performance of a contract, not in its execution.” Sheehy v. Lipton Indus., Inc., 24 Mass. App. Ct. 188, 194 n.6 (1987) (affirming grant of summary judgment dismissing claim). Thus, Whittier’s alleged failure to disclose that it was planning to leave the SHCN network before negotiating revised payment terms for the remainder of the contract term would not give rise to a viable claim for breach of the implied covenant.
1.5. Claim for Declaratory Relief. Count IV of SHCN’s proposed counterclaim would seek a declaration that Whittier committed a material breach of its contractual obligations to SHCN. This claim for declaratory relief would be futile because, as discussed above, SHCN alleges no facts plausibly suggesting there is any actual controversy between the parties regarding whether Whittier breached any of its contractual obligations. See Manufacturing Imp. Corp. v. Georgia Pacific Corp., 362 Mass 398, 400-401 (1972) (affirming dismissal of declaratory judgment claim regarding rights under contract, because plaintiff alleged no facts under which it would be entitled to recover from defendant for breach of contract); see generally Alliance, AFSME/SEUI, AFL-CIO, v. Commonwealth, 425 Mass. 534, 537-539 (1997) (in absence of actual controversy between the parties, claim for declaratory relief under G.L. c. 231A must be dismissed).
2. Proposed Claims Against Anna Jacques. SHCN also seeks leave to add claims against a new defendant, Anna Jacques Hospital, either by asserting third-party claims under Mass. R. Civ. P. 14 or by joining Anna Jacques as a counterclaim defendant under Rule 19 or 20. The Court will deny this request as well for two, independent reasons. It would be futile to add these claims against Anna Jacques because they could not survive a Rule 12(b)(6) motion to dismiss. In any case, SHCN has no right to add Anna Jacques as a party and it would be
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unfair, both to Anna Jacques and to Whittier, to allow SHCN to do so at this late stage of the case.
2.1. Futility. In its proposed third-party complaint, SHCN alleges that “Anna Jacques launched an effort to disrupt the Whittier-SHCN contracts and lure the Whittier physicians to instead join Anna Jacques in an affiliation with Beth Israel’s care network, known as the Beth Israel Deaconess Care Organization or ‘BIDCO.’ ” It also alleges that these “efforts resulted in Whittier breaching its contract with SHCN [and] withdrawing from” SHCN’s physician network. SHCN seeks leave to assert claims against Anna Jacques for tortiously interfering with the contractual relationship between SHCN and Whittier, tortiously interfering with advantageous business relationships that SHCN had with Whittier and several health insurers, and for allegedly violating G.L. c. 93A by engaging in such tortious interference.
The Court concludes that it would be futile for SHCN to amend its pleadings to assert these claims against Anna Jacques.
The proposed claim for tortious interference with the contractual relationship between Whittier and SHCN would be futile because SHCN alleges no facts plausibly suggesting that Whittier was ever induced to breach its contracts with SHCN. To state a claim for intentional interference with contractual relations, a party must allege facts plausibly suggesting that: “(1) [it] had a contract with a third party; (2) the defendant knowingly induced the third party to break that contract; (3) the defendant’s interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant’s actions.” Weiler v. PortfolioScope, Inc., 469 Mass. 75, 84 (2014), quoting G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 272 (1991). SHCN cannot make out the second element of this claim because it has not alleged facts that, if proven, would show that Whittier violated its SHCN contracts. The “bare assertion” that Whittier breached its contracts is not enough. Eigerman, 450 Mass. at 287. As discussed above, Whittier was free to terminate its contractual relationship with SHCN, to negotiate a successor arrangement with BIDCO before doing so, and to disclose information that SHCN had not specified in writing was
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confidential. Thus, even if SHCN could prove that Anna Jacques induced Whittier to leave the SHCN network or to share information regarding SHCN’s payments to Whittier, it cannot show that doing so resulted in Whittier breaking its contracts with SHCN. Therefore, Anna Jacques cannot be liable for tortiously interfering with the contractual relationship between Whittier and SHCN. See JNM Hospitality, Inc. v. McDaid, 90 Mass. App. Ct. 352, 354-355 & 357 (2016) (where landlord did not breach lease by failing to make nonexclusive parking spaces available to customers of restaurant lessee, third party that executed license to use some of those spaces could not be liable for intentional interference with contract); Cavicchi v. Koski, 67 Mass. App. Ct. 654, 661 (2006) (where clients did not breach contingent fee agreements when they discharged their attorney, new lawyer who convinced them to do so could not be liable for intentional interference with contract).
SHCN cannot avoid this problem by claiming in the alternative that Anna Jacques interfered with an advantageous business relationship between Whittier and SHCN, rather than with a contractual relationship. The only business relationship that SHCN alleges it had with Whittier was defined by contract; as a result any claim for intentional interference must be for tortiously inducing a breach of contract, not for tortious interference with a non-contractual advantageous business relationship. Cachopa v. Town of Stoughton, 72 Mass. App. Ct. 657, 658 n.3 (2008).
Nor has SHCN alleged any facts plausibly suggesting that Anna Jacques tortiously interfered with any advantageous business relationship between SHCN and various health insurers. All that SHCN claims with respect to the insurers is that Whittier’s decision to join BIDCO, rather than remain in the SHCN network for the full five-year term of the Service Agreement, “deprived SHCN of substantial revenue that would have flowed to its network.” But if Anna Jacques did nothing unlawful in convincing Whittier to leave the SHCN network, the mere fact than one effect of that move is that SHCN will collect less money from health insurers—because Whittier physicians will no longer be providing compensable medical care through the SHCN network—cannot give rise to a tortious interference claim with respect to the health insurers.
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Finally, since SHCN’s claim against Anna Jacques under c. 93A is based solely on and thus “is wholly derivative of” its claims for tortious interference, and SHCN has not alleged facts plausibly suggesting that Anna Jacques unlawfully interfered with the contracts between SHCN and Whittier, the proposed claim against Anna Jacques under c. 93A would necessarily be futile as well. See Pembroke Country Club, Inc. v. Regency Savings Bank, F.S.B., 62 Mass. App. Ct. 34, 40-41 (2004) (ordering judgment in favor of defendant); accord, e.g., Macoviak v. Chase Home Mortgage Corp., 40 Mass. App. Ct. 755, 760, rev. denied, 423 Mass. 1109 (1996) (c. 93A claim “necessarily fail[s]” where it “is solely based upon … underlying claim for common law” tort, and that tort claim fails as a matter of law). The allegations that Anna Jacques put some pressure on Whittier to change networks does not state a claim for an unfair trade practice in violation of c. 93A, even though it cause a large number of physicians to leave SHCN’s network and join a competitor. Cf. Buster v. George W. Moore, Inc., 438 Mass. 635, 650-651 (2003) (“the market is a rough and tumble place where a competitor’s lack of courtesy, generosity, or respect is neither uncommon nor in itself unlawful” under c. 93A). “Hard bargaining is not unlawful; it is ‘not only acceptable, but indeed, desirable, in our economic system, and should not be discouraged by the courts.’ ”Cabot Corp. v. AVX Corp., 448 Mass. 629, 639 (2007), quoting 13 S. Williston, Contracts § 71.7, at 450 (3d ed. 1970).
2.2. Timing. Even if SHCN had stated viable claims against Anna Jacques, which it has not, it is far too late in this proceeding to add Anna Jacques as a defendant.
SHCN has no right to assert claims against Anna Jacques in this action. It cannot assert a third-party claim under Mass. R. Civ. P. 14 because it does not allege that Anna Jacques is liable to SHCN for Whittier’s “alleged injuries through indemnity, contribution, or otherwise.” Gabbidon v. King, 414 Mass. 685, 687 (1993) (affirming dismissal of third-party complaint). Nor is Anna Jacques subject to compulsory joinder under Rule 19, because complete relief can be accorded between Whittier and SHCN without Anna Jacques being a party, and Anna Jacques claims no interest in any subject of the action. Cf. Mass. R. Civ. P. 19(a).
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The Court has the discretion to join Anna Jacques as a counterclaim defendant under Mass. R. Civ. P. 13(h) and 20(a), because the putative claims by SHCN against Anna Jacques arise out of the same series of transactions or occurrences as do the claims by Whittier against SHCN, and both sets of claims will involve common questions of fact and law. “Rule 20 gives courts wide discretion concerning the permissive joinder of parties, and “should be construed in light of its purpose, which ‘is to promote trial convenience and expedite the final determination of disputes, thereby preventing multiple lawsuits.’ ” Aleman v. Chugach Support Servs., Inc., 485 F.3d 206, 218 (4th Cir. 2007), quoting Mosley v. General Motors Corp., 497 F.2d 1330, 1332 (8th Cir.1974).
But the Court concludes, in the exercise of its discretion, that it would be unfair to allow SHCN to join Anna Jacques as a counterclaim defendant barely a month before the deadline for completing discovery. “[T]he court has discretion to deny joinder if it determines that the addition of the party under Rule 20 will not foster the objectives of the rule, but will result in prejudice, expense, or delay.” Id., quoting 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1652 (3d ed.2001); cf. Smaland Beach Ass’n, Inc. v. Genova, 461 Mass. 214, 228 (2012) (judicial construction of federal rules of civil procedure generally applies to parallel state rules). It would be unfair to Anna Jacques to join it as a counterclaim defendant but not give it sufficient time to conduct discovery. Conversely, Whittier would be unfairly prejudiced if Anna Jacques were added to the case and as a result the discovery deadline was extended and resolution of Whittier’s claims against SHCN was therefore delayed.
SHCN has known of and threatened to assert its claims against Anna Jacques at least since September 2014. At that time SHCN wrote to Whittier’s lawyer and asserted “that SHCN has viable claims … against the entities that improperly induced Whittier to leave SHCN, including …. Anna Jacques Hospital.” SHCN could have sought to assert claims against Anna Jacques at that time. Or it could have promptly conducted discovery against Anna Jacques to determine whether it had an adequate factual basis for asserting such claims. Instead SHCN waited two years to obtain discovery from Anna Jacques and then seek to assert
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claims for tortious interference and violation of G.L. c. 93A. In other words, SHCN has no one to blame but itself for the fact that it is now too late to add any claims against Anna Jacques to this civil action.
ORDER
Defendant’s motion for leave to assert counterclaims and to file a third-party complaint is DENIED.
January 18, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - February 2, 2017 at 7:32 am

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Silva v. Todisco Services, Inc. (Lawyers Weekly No. 12-006-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV02778-BLS2
____________________
CHRISTOPHER SILVA, on behalf of himself and all others similarly situated
v.
TODISCO SERVICES, INC. d/b/a Todisco Towing
____________________
MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
Todisco Towing towed Christopher Silva’s motor vehicle without Silva’s consent from a private parking lot in Salem, Massachusetts, to East Boston. The Todisco invoice says this was a “trespass” tow, which presumably means that the vehicle was towed at the request of the property owner or manager because it was parked there illegally in violation of a posted notice. Cf. G.L. c. 266, § 120D. Silva says Todisco charged him $ 169.00, including a $ 90.00 towing charge; a $ 42.00 mileage charge; a $ 35.00 storage charge; and a $ 2.00 fuel surcharge.
Silva alleges that the mileage charge and fuel surcharge were illegal because Todisco’s invoice or tow slip did not include information required by 220 C.M.R. § 272.03, a regulation promulgated by the Department of Public Utilities (“DPU”) that establishes maximum rates for towing vehicles. Silva asserts claims for negligent misrepresentation, intentional fraud, unjust enrichment, violating G.L. c. 93A, and declaratory judgment. He also seeks to represent a class consisting of all people whose motor vehicles were towed by Todisco and were charged a mileage fee or fuel surcharge when Todisco did not record the required information on the tow slip. Silva seeks monetary compensation for damages, punitive damages under c. 93A, equitable relief, and declaratory relief on behalf of himself and the putative class members.
Todisco moves to dismiss this action on the grounds that Silva lacks standing, the DPU has primary jurisdiction, the statute authorizing a fine for violating the tow charge regulation bars any other relief, the cited regulation did not require Todisco to disclose any information, the claims for misrepresentation and fraud cannot be decided on a class-wide basis, and the claims for misrepresentation and fraud and under G.L. c. 93A are all preempted by federal law. The Court concludes that none of these arguments justifies dismissal. It will therefore DENY the motion to dismiss.
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1. Standing. Todisco asserts that Silva lacks standing to bring this action because the allegations in the complaint establish that Todisco’s alleged wrongdoing did not cause Silva himself to suffer any injury. This argument is without merit.
Todisco correctly points out that the complaint alleges that Nathan Silva went to East Boston to retrieve the towed vehicle and paid the $ 169.00 total charge demanded by Todisco.
But the complaint also alleges that Nathan paid the towing charges imposed by Todisco on behalf of Christopher Silva, Nathan was acting as Christopher’s agent, Christopher is the one who actually paid the amount charged by Todisco, and therefore Christopher (not Nathan) is the one who suffered financial harm as a result of Todisco imposing towing charges that were not allowed under 220 C.M.R. § 272.03.
Those allegations plausibly suggest that Todisco breached a legal duty owed to Silva by charging more for an involuntary tow than permitted by law, that Silva himself was injured by Todisco’s actions, and that Silva therefore has standing to bring this action. See G.L. c. 93A, § 9(1) (any person injured by unfair or deceptive act or practice in trade or commerce may bring action in superior court for damages and equitable relief); Sullivan v. Chief Justice for Admin. & Mgmt. of the Trial Court, 448 Mass. 15, 22-23 (2007) (plaintiff has standing if allegations in complaint plausibly suggest that defendant owed legal duty to plaintiff, breached that duty, and plaintiff suffered injury as a result). Silva was not required to allege in more detail facts showing that Nathan was acting as Silva’s agent and paid Todisco on behalf of Silva. See, e.g., Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (“detailed factual allegations are not required”); Cannonball Fund, Ltd. v. Dutchess Capital Mgmt., LLC, 84 Mass. App. Ct. 74, 93-95, rev. denied, 466 Mass. 1106 (2013) (plaintiff’s standing is determined based on factual allegations in complaint, assuming them to be true).
2. Primary Jurisdiction. Todisco asserts that the DPU has primary jurisdiction over Silva’s claims, and that the Court should therefore dismiss this action. “The doctrine of primary jurisdiction arises in cases where a plaintiff, ‘in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy’ that includes an issue within the special
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competence of an agency.” Fernandes v. Attleboro Hous. Auth., 470 Mass. 117, 121 (2014), quoting Murphy v. Administrator of the Div. of Personnel Admin., 377 Mass. 217, 220 (1979). This doctrine “has particular applicability when ‘an action raises a question of the validity of an agency practice … or when the issue in litigation involves “technical questions of fact uniquely within the expertise and experience of an agency.” ’ ” Id. (ellipsis in original), quoting Murphy, supra, at 221, quoting in turn Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 304 (1976).1
The DPU and the Superior Court share jurisdiction over claims that a towing company has violated the Department’s towing rate regulation. Since Silva’s vehicle was towed at the request of the owner or operator of the property where the vehicle had been parked, and without the consent of Silva or any authorized user of the vehicle, Todisco could not charge Silva any more than the maximum amount allowed for such involuntary tows under the applicable DPU regulations. See G.L. c. 266, § 120D. All of Silva’s claims are based on his allegation that Todisco imposed towing charges for mileage and a fuel surcharge without providing information required under 220 C.M.R. § 272.03. This regulation was adopted by the Department pursuant to its authority under G.L. c. 159B, § 6B, to regulate the maximum charges that may be assessed for the involuntary towing of motor vehicles. Anyone affected by a violation of this regulation “may file” a complaint with the Department. G.L. c. 159B, § 21. But this jurisdiction is not exclusive. See Papetti v. Alicandro, 317 Mass. 382, 385-390 (1944). The governing statute provides that the Superior Court retains “jurisdiction in equity to restrain any … violation” of regulations promulgated this statute. See G.L. c. 159B, § 21. In addition, individuals like Silva who contend they have been overcharged may file an action in Superior Court seeking repayment, just
1 The doctrines of exhaustion of administrative remedies and primary jurisdiction serve similar purposes but apply in different circumstances. See Liability Investigative Effort, Inc. v. Medical Malpractice Joint Underwriting Ass’n of Massachusetts, 409 Mass. 734, 750-751 (1991). “The doctrine of exhaustion of administrative remedies contemplates a situation where some administrative action has begun, but has not yet been completed; where there is no administrative proceeding under way, the exhaustion doctrine has no application. In contrast, primary jurisdiction situations arise in cases where a plaintiff, in the absence of pending administrative proceedings, invokes the original jurisdiction of a court to decide the merits of a controversy.” Id., quoting Murphy, 377 Mass. at 220.
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as carriers or towers who contend they are owed money under this regulation may file a civil action seeking payment. Cf. Papetti, supra, at 391-393.
Where a lawsuit involves a dispute over which a court and an administrative agency share jurisdiction, as in this case, the court generally has broad discretion as to whether to allow the lawsuit to proceed or instead dismiss or stay the action and refer issues to the agency under the doctrine of primary jurisdiction. See Blauvelt v. AFSCME Council 93, Local 1703, 74 Mass. App. Ct. 794, 801-802 (2009).
But Silva seeks damages and other relief under G.L. c. 93A, § 9. That makes it inappropriate to dismiss or even to stay this case on the ground that the DPU has primary jurisdiction over this dispute.
By statute, individuals who are “entitled to bring an action” under G.L. c. 93A, § 9, “shall not be required to initiate, pursue or exhaust” any administrative remedies before filing suit or obtaining relief under c. 93A in court. See G.L. c. 93A, § 9, ¶ (6). This provision bars courts from dismissing or staying a § 9 claim on the ground that the plaintiff should first seek relief in some other forum. Hannon v. Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 826 (1982). It was added to c. 93A to reverse a contrary ruling by the Supreme Judicial Court. In 1972 the SJC held that an individual claiming he was overcharged by an insurer had to exhaust his administrative remedies before the Commissioner of Insurance before filing suit in Superior Court under c. 93A. See Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582, 585-588 (1972). The Legislature responded to Gordon by enacting “St.1973, c. 939, which amended G.L. c. 93A, s 9, so as to obviate, except in specified cases, the requirement that administrative remedies be exhausted before relief can be granted under c. 93A.” Slaney v. Westwood Auto, Inc., 366 Mass. 688, 691 n.4 (1975).
Although courts retain some discretion to stay § 9 claims to give the defendant the opportunity to initiate a proceeding before an administrative agency, by statute they may do so “only in certain limited circumstances.” Hannon, supra. Specifically, the Legislature has authorized such a stay only if: (a) “there is a substantial likelihood” that the court case could result in an order “that would disrupt or be inconsistent with a regulatory scheme” that applies to the conduct at issue in the case, or (b) the regulatory agency “has a substantial interest in reviewing” the conduct
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at issue and also “has the power to provide substantially the relief sought[.]” G.L. c. 93A, § 9, ¶ (7).
Neither of these statutorily-permissible reasons for staying claims applies in this case. Since Silva seeks an order compelling Todisco to comply with the regulatory scheme that governs involuntary tows, there is little chance that Silva will obtain an order requiring Todisco to do anything inconsistent with the regulatory scheme. And the DPU “lacks authority to order” Todisco to repay “a collected overcharge to customers” or to award the other relief sought by Silva under c. 93A. See Southbridge Water Supply Co. v. Dept. of Pub. Utils., 368 Mass. 300, 310 (1975).
Nor does it make any sense to stay Silva’s common law claims. As the Court just noted, the DPU “is not authorized to order reimbursement of collected charges to customers.” See Lowell Gas Co. v. Attorney Gen., 377 Mass. 37, 45 (1979). Furthermore, the question of whether Todisco is charging fees not allowed under the DPU’s towing charge regulations turns on questions of regulatory interpretation that Superior Court judges deal with regularly; it is not a highly technical issue that cannot be understood and fairly resolved without the Department’s specialized expertise. Under these circumstances, Silva should be allowed to press his claim and the putative class claims in court. “This is not a case in which the proper allocation of responsibilities between the courts and an administrative agency calls for judicial forbearance until agency action occurs.” See Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60, 61-62 (1999) (Superior Court properly retained jurisdiction over counterclaims that provider violated G.L. c. 93A, § 11, by overcharging for chiropractic services, rather than deferring to primary jurisdiction of Board of Registration of Chiropractors, where board had “no authority to award G.L. c. 93A damages” and overcharging claim was “not a complicated issue calling for agency expertise”).
3. Availability of Compensatory Remedy. Todisco notes that the DPU may impose a $ 100 fine to punish a violation of the towing charge regulation. See G.L. c. 159B, § 21. Todisco then asserts that this fine is the exclusive remedy and that Silva may not seek compensatory damages or injunctive relief on behalf of himself or the putative class. This argument is without merit.
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Nothing in § 21 provides or even suggests that courts are barred from ordering repayment of overcharges, punitive damages and attorneys’ fees under c. 93A, or appropriate injunctive relief as a remedy for a violation of this regulation. Cf. J. & J. Enterprises, Inc. v. Martignetti, 369 Mass. 535, 539 (1976) (statute authorizing Alcoholic Beverages Control Commission to impose fine did not create exclusive remedy that would bar court from awarding damages, injunctive relief, and other relief under c. 93A). To the contrary, and as noted above, the power of the DPU to enforce the towing charge regulations is not exclusive. See Papetti, 317 Mass. at 385-390; G.L. c. 159B, § 21. The mere fact that the Legislature authorized imposition of a small fine does not, by itself, make that the exclusive remedy. See Labor Relations Comm’n v. Boston Teachers Union, Local 66, 374 Mass. 79, 92-93 (1977).
4. Legal Obligation to Disclose Mileage and Fuel Information. Todisco next asserts that Silva’s claim fails as a matter of law because nothing in the governing regulation required Todisco to disclose odometer and fuel surcharge information to the customer before imposing and collecting mileage and fuel charges for an involuntary tow. This argument is also without merit.
The regulation cited by Silva expressly required Todisco to provide customers like Silva with the information at issue. With respect to the mileage charge, the regulation provides that the charge is to be “based on round trip mileage from garage to return thereto,” that the towing companying is to “establish the mileage from the service vehicle odometer,” and that it “must include the odometer readings on the tow slip.” See 220 C.M.R. § 272.03, Note 3. With respect to the fuel surcharge, the regulation states that “the towing slip must record” certain specified information. Id., “Fuel Price Surcharge,” ¶ 6. By requiring that certain information be included on the tow slip, the regulation makes clear that this information must be disclosed and provided to the customer.
5. Amenability to Class Certification. Todisco argues that Silva should not be allowed to assert claims for intentional fraud or negligent misrepresentation on behalf of the putative class because the question of actual reliance cannot be decided on a class-wide basis. This argument is premature. Silva has not yet moved for class certification. The proper time to raise this argument is in response to a motion to
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certify the class, which Silva is not required to serve or file at this time. Cf. Massachusetts General Hospital v. Rate Setting Commission, 371 Mass. 705, 713 (1977) (unlike parallel federal rule, Mass. R. Civ. P. 23 does not require that class certification be decided at outset of case).
6. Federal Preemption. Todisco argues that Silva’s claims for intentional fraud, negligent misrepresentation, and violation of the Massachusetts Consumer Protection Act (G.L. c. 93A) are preempted by the Federal Aviation Administration Authorization Act, which bars states from regulating any “price, route, or service of any motor carrier … with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).
This argument fails because it cannot be squared with a separate provision of this federal law. Congress provided that the preemption provision relied upon by Todisco “does not apply to the authority of a State or a political subdivision of a State to enact or enforce a law, regulation, or other provision relating to the regulation of tow truck operations performed without the prior consent or authorization of the owner or operator of the motor vehicle.” Id. § 14501(c)(2)(C). Since Silva’s vehicle was towed without the prior consent or authorization of the vehicle owner or operator, the Commonwealth of Massachusetts is free to regulate the charges imposed by Todisco without running afoul of the FAAAA preemption provision. As a result none of Silva’s claims is preempted. See Tillison v. Gregoire, 424 F.3d 1093, 1100 (9th Cir. 2005) (state regulations that “impact the prices operators charge for non-consensual towing” are “saved from preemption by the exception in FAAAA which allows such regulation of prices”); State v. Transmasters Towing, 168 P.3d 60, 66 (Kansas Ct. App. 2007) (claims under Kansas Consumer Protection Act that charges for involuntary tows were excessive not preempted by FAAAA, in part because they fall within preemption exception of § 14501(c)(2)(C)).
7. Declaratory Relief. Finally, since Silva’s other claims survive the motion to dismiss, his claim seeking declaratory relief under G.L. c. 231A does as well. As explained above, the pleadings in this case make clear that there is an actual controversy between the parties regarding whether the towing charges imposed by Todisco were lawful, and Silva has standing to seek relief. Nothing more is needed to
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state a claim for declaratory relief. See, e.g., Galipault v. Wash Rock Investments, LLC, 65 Mass. App. Ct. 73, 83 (2005).
ORDER
Defendant’s motion to dismiss this action is DENIED. The Court will conduct a scheduling conference under Mass. R. Civ. P. 16 on February 21, 2017, at 2:00 p.m.
23 January 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - February 1, 2017 at 8:46 pm

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Middlesex Integrative Medicine, Inc. v. Massachusetts Department of Public Health (Lawyers Weekly No. 12-180-16)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
NO. 2014-2727-BLS1
MIDDLESEX INTEGRATIVE MEDICINE, INC.
vs.
MASSACHUSETTS DEPARTMENT OF PUBLIC HEALTH
MEMORANDUM OF DECISION AND ORDER ON
PARTIES’ CROSS-MOTIONS FOR JUDGMENT ON THE PLEADINGS
The plaintiff, Middlesex Integrative Medicine, Inc. (MIM), filed this action in the nature
of certiorari under G. L. c. 249, § 4 against the defendant, the Massachusetts Department of
Public Health (Department), after the Department denied each of MIM’s three applications to
operate Registered Marijuana Dispensaries (RMDs) in Massachusetts. MIM and the Department
have each moved for judgment on the pleadings pursuant to Mass. R. Civ. P. 12(c). On
November 21, 2016, this court held a hearing on the motions. For the reasons stated below,
MIM’s motion for judgment on the pleadings is DENIED and the Department’s motion for
judgment on the pleadings is ALLOWED.
BACKGROUND
In November, 2012, Massachusetts voters approved a ballot initiative allowing for the
medical use of marijuana for qualifying patients. Thereafter, the Legislature enacted Chapter 369
of the Acts of 2012, known as “An Act for the Humanitarian Medical Use of Marijuana” (Act).
St. 2012, c. 369. The Act authorized the Department to register at least one, and up to five,
RMDs in each Massachusetts county, up to a total of 35 statewide, during the first year after the
law’s effective date (January 1, 2013). G. L. c. 94C, App. § 1-9.
Pursuant to the Act, the Department promulgated regulations (105 Code Mass. Regs. §
725.001 et seq.) which established, among other things, a two phase application process. In
Phase 1, the applicant paid a non-refundable fee and submitted basic information that was
reviewed by the Department. See 105 Code Mass. Regs. § 725.100(B)(1). If the applicant
submitted all of the required information in a timely fashion, the applicant was notified that it
could proceed to Phase 2. See id. at § 725.100(B)(2). In this phase, the applicant paid a nonrefundable
$ 30,000 fee and submitted an application containing much more detailed information
about its proposed dispensary, after which the Department evaluated and scored the application.
See id. at § 725.100(B)(3)-(5).
MIM sought to operate three RMDs – one in Middlesex County (Everett), one in Norfolk
County (Norwood), and one in Worcester County (Shrewsbury). In August 2013, MIM filed a a
Phase 1 application for each location and, along with other applicants, MIM was invited by the
Department to submit Phase 2 applications. On November 21, 2013, MIM paid the Department
$ 90,000 and filed three Phase 2 applications. Out of a possible 163 points, MIM received scores
of 118, 127, and 118 on its three applications.
On January 31, 2014, the Department announced the selection of 20 applicants to receive
a Provisional Certificate of Registration. On the same day, the Department notified MIM by
letter that its Phase 2 applications had been denied and it was therefore not one of the selected
applicants.
2
On March 7, 2014, MIM participated in an informational briefing with the Department to
discuss the scoring of its applications and the reasons why the applications did not sufficiently
satisfy the Department’s criteria for an award of a Provisional Registration Certificate. During
the meeting, MIM asked to and was allowed to submit additional materials which sought to
address the alleged deficiencies in its applications. Several months later, by letters dated June
27, 2014, the Department informed MIM that its “status has not changed and you have not been
selected for a [dispensary] registration.”
The Department’s regulations specify that an applicant receiving a notice of non-selection
may seek judicial review in the Superior Court under G. L. c. 249, § 4, the certiorari statute. 105
Code Mass. Regs. § 725.500(D). MIM invoked this procedure and filed this suit in August 2014.
MIM maintains that the Department’s denials of its 2013 Phase 2 applications were arbitrary and
capricious because: the Department improperly delegated its authority to approve or deny the
Phase 2 applications to a contractor; scored its applications unfairly; and failed to consider the
additional materials it submitted at the March 2014 informal briefing.
In June 2015, the Department began accepting additional applications for RMDs using a
new application process. Applications are now reviewed on a rolling basis as they are received.
The applications are no longer scored. Instead, they are reviewed for compliance with the Act
and the applicants are notified of necessary updates or clarifications.1
Under the revised application process, the applicant first submits an “Application of
Intent” along with an application fee. After reviewing the application, the Department invites
successful applicants to move on and submit the more comprehensive “Management and
1 The Department apparently is no longer limiting the number of RMDs that will be approved, as long as the
applicants demonstrate compliance with the Act and the Department’s regulations.
3
Operations Profile” (MOP) along with another fee. After submission of the MOP, the
Department reviews the information and contacts the applicant if clarifications/updates to the
submitted application materials are needed. When the Department is satisfied with what it has
recieved, the applicant is invited by the Department to submit a Siting Profile. Once submitted,
the Department reviews the information in the Siting Profile and, as with the MOP, contacts the
applicant if clarifications/updates to the submitted materials are needed. After this process is
complete, the Department notifies the applicant whether it has met the standards necessary to
receive a Provisional Certificate of Registration.
In June 2015, as this lawsuit remained pending, MIM decided to participate in this new
process and filed Applications of Intent for three dispensaries. It paid a $ 1,500 fee for each
Application. In September 2015, the Department invited MIM to submit a MOP for all three
Applications. MIM, however, only elected to submit a MOP for one proposed facility. In
connection with this MOP, MIM paid an application fee of $ 30,000. MIM’s application remains
pending. It will be expected to pay a $ 50,000 fee if awarded a Provisional Certificate of
Registration and to pay an annual $ 50,000 registration fee if finally approved to operate a RMD.
DISCUSSION
In moving for judgment on the pleadings, MIM asserts that “[t]here is little point to
remanding the consideration of MIM’s 2013 Applications for further review or rescoring by [the
Department]” given that “[the Department] has already changed its application process” and
“MIM has also moved on . . . [and] is now focused on different opportunities and locations.” Pl.
Brief at 26. Accordingly, MIM now seeks only monetary relief rather than reversal or remand to
4
the Department for further proceedings.2 Specifically, MIM seeks an order that the Department
must credit the $ 90,000 it paid in connection with its 2013 applications towards the fees it will
pay should its 2015 application continue successfully to proceed through the new application
process.3
The relief MIM seeks is not appropriately granted because nothing in the Act or its
implementing regulations allows for this type of remedy. See, e.g., Commonwealth v. Martin,
476 Mass. 72, 77 (2016) (defendant who filed successful motion to withdraw a guilty plea not
entitled to return of probation supervision fees where no statutory basis for recoupment of such
fees existed); Associated Indus. of Mass. Mut. Ins. Co. v. Hough, 84 Mass. App. Ct. 531, 532-
536 (2013) (employee who successfully defended against action brought by insurer to recoup
excess workers’ compensation benefits not entitled to attorneys fees because no provision of
Chapter 152 authorized such an award). See also Chin v. Merriot, 470 Mass. 527, 537 (2015)
(“We will not ‘read into the statute a provision which the Legislature did not see fit to put
there.’”). Indeed, the Department’s regulations specify that the fees paid in connection with
Phases 1 and 2 are “non-refundable.” See 105 Code Mass. Regs. § 725.100(B)(1)(i) and
(B)(3)(a). The only remedy for a disappointed applicant under the Department’s regulations is
“judicial review in Superior Court in an action for certiorari relief.” 105 Code Mass. Regs. §
2 In its reply brief, MIM suggests a complicated remand procedure if the Court denies its request for monetary relief.
See Pl. Reply Brief at 5. As MIM itself indicated in its initial brief, because it filed three new applications before the
resolution of this lawsuit, remand of the matter now makes little sense and is waived by MIM.
3 In arguing it is entitled to monetary relief, MIM references a line of cases allowing low bidders wrongfully
deprived of a contract to recover bid preparation costs and lost profits. See, e.g., Paul Sardella Constr. Co. v.
Braintree Hous. Authy., 3 Mass. App. Ct. 326 (1975). None of these cases is applicable as they all arose under
statutes different from the Act and did not involve a discretionary certification decision, as was the case here. See
Mello Constr. v. Division of Capital Asset Mgmt., 84 Mass. App. Ct. 625, 630 n.10 (2013) (rejecting similar
argument made by contractor whose application for certification of eligibility to bid on public construction contracts
was denied by agency).
5
725.500(D). Certiorari review, however, is not intended to serve as a vehicle for recovering
monetary damages.
“It is the function of a writ of certiorari . . . to correct substantive errors of law by a
judicial or quasi judicial tribunal which are not otherwise reviewable by a court.” ” Gifford v.
Commissioner of Pub. Health, 328 Mass. 608, 619 (1952); see also School Comm. of Hudson v.
Board of Educ., 448 Mass. 565, 575-576 (2007) (“Certiorari is a limited procedure reserved for
correction of substantial errors of law apparent on the record created before a judicial or
quasi-judicial tribunal.”) Accordingly, remedies under the certiorari statute are restricted to the
modification or annulment of an unlawful government action, or a remand order for
reconsideration and/or further proceedings. See Mello Constr. v. Division of Capital Asset
Mgmt., 84 Mass. App. Ct. 625, 630 (2013). This is particularly true where, as is the case here, a
plaintiff is seeking relief for the denial of an application submitted to an administrative agency.
Cf. id. at 629-631 (finding that contractor whose application for certification of eligibility to bid
on public construction contracts was denied by agency could not sue agency for money damages
but could only seek judicial review through an action in the nature of certiorari).
In support of its position, MIM points to Haverhill Bridge Proprietors v. County Comm’rs
of Essex, a nineteenth century decision on a petition for a writ of certiorari. 103 Mass. 120
(1869). In the case, Essex county officials ruled, pursuant to a statute that required monetary
payment for a taking by eminent domain, that the county was not required to render full payment
for the taking of the plaintiffs’ bridge; the plaintiffs would have to secure a substantial portion of
its compensation directly from the towns in the county. The Court held that the county officials
had incorrectly interpreted the statute and concluded that the plaintiffs were entitled to full
6
payment from the county treasury. In so ruling, the Court awarded interest to the plaintiffs,
noting that “if interest should not be allowed them they would not receive the full indemnity
intended in the original award.” Id. 128. MIM argues that the award of interest in Haverhill
Bridge Proprietors shows that the award of monetary relief is appropriate here. The decision,
however, is inapposite. The recovery of interest was implied by the eminent domain statute at
issue. This case, in contrast, concerns the denial of applications pursuant to a statute that does
not contemplate monetary compensation of any sort. Moreover, the Court’s ruling, including the
award of interest, was consistent with the traditional function of certiorari review; it modified an
otherwise unlawful government action. In this case, the relief MIM seeks would go well beyond
the modification of the challenged action, i.e., the decision to deny its applications. Significantly,
MIM points to no other case, and certainly no recent case, involving the award of monetary relief
under the certiorari statute.4
Accordingly, because MIM now seeks relief the Court cannot grant, MIM cannot succeed
on its motion for judgment on the pleadings.
4 Alternatively, MIM suggest that the applications fees it paid in 2013 were an unconstitutional tax and that
therefore the Court has the authority to order the Department to reduce or refund the fees charged. This argument is
without merit. None of the cases MIM cites in support of its contention involved application fees or anything
analogous, and each was brought under G. L. c. 231, not the certiorari statute. See, e.g., Emerson Coll. v. Boston,
391 Mass. 415, 423-426 (1984) (finding fee imposed on certain property owners an unconstitutional tax); Boston
Gas Co. v. Newton, 425 Mass. 697 (1997) (city ordinance assessing a fee on public utilities unconstitutional tax).
Even setting those considerations aside, the cases do not otherwise suggest that the fees imposed by the Department
were unconstitutional.
7
CONCLUSION
For the reason stated above, Middlesex Integrative Medicine, Inc.’s motion for judgment
on the pleadings is DENIED and the Massachusetts Department of Public Health’s motion for
judgment on the pleadings is ALLOWED.
By the Court,
________________________
Edward P. Leibensperger
Justice of the Superior Court
December 19, 2016
8

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DeVito, et al. v. Longwood Security Services, Inc., et al. (Lawyers Weekly No. 12-169-16)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2013-01724 BLS 1
DEAN DEVITO, JASON OLIVIERA, ALEX VELAZQUEZ, individually, and on behalf
of a class
vs.
LONGWOOD SECURITY SERVICES, INC. and JOHN T. CONNELLY
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS FOR SUMMARY
JUDGMENT and TO DECERTIFY THE CLASS
On June 17, 2015, this court (Frison, J.) certified a class of plaintiffs consisting of
security officers employed, currently or in the immediate past, by defendant, Longwood Security
Services. The principal claim of plaintiffs and the class is that Longwood failed to pay them in
full for wages earned. The claim is brought under the Wage Act, G.L. c. 149, § 148. Briefly
stated, the claim is that for each eight hour shift, thirty minutes were deemed to be a meal break.
Longwood did not include in the employees’ hours worked the thirty minutes per shift for the
unpaid meal break. Plaintiffs claim that the thirty minutes should be compensated as wages
earned because they remained on duty during the meal breaks.
The issue presented by these motions is what legal standard should be applied to
determine whether the thirty minute meal break is compensable working time. Both sides agree
that the issue is one that no Massachusetts appellate court has addressed. Longwood contends
that the test for compensation should be whether the employee’s meal break time was spent
1
predominantly for the benefit of the employer (the “predominant test”). Plaintiffs, on the other
hand, contend that the test for compensation should be whether the employee was relieved of all
duties (the “relief from duties test”) during the meal break. Based upon Longwood’s view that
the predominant test is applicable, it moves for summary judgment and decertification of the
class.
BACKGROUND
The parties’ Joint Statement of Material Facts (“SMF”) does not comply with Superior
Court Rule 9A. Instead of precise statements of undisputed fact, the SMF consists of broad,
argumentative statements of position and equally argumentative responses. Of the 82 numbered
paragraphs in the SMF, the vast majority are disputed, denied or qualified by the party opposing
the statement. On that basis alone, the court could conclude that because of the disputes over
material facts summary judgment should be denied. In fact, this court in two previous rulings
denied the parties’ attempts to obtain summary judgment. Nevertheless, the parties persuasively
presented at oral argument that it would aid resolution of the case, and would be necessary in any
event for the trial of the case, for the court to determine which test for compensable time should
be applied to plaintiffs’ claims under Massachusetts law.
Longwood provides private security services at numerous locations, such as housing
developments, hospitals and colleges. Longwood employed each of the plaintiffs as security
officers. Longwood maintains a policy whereby officers may take a meal break, called a “10-7″,
for the “max amount of time” of thirty minutes. Longwood does not pay the officers for the thirty
2
minute meal break.1 During the meal break, officers must remain in uniform and are not allowed
to leave their assigned sector without permission. Longwood’s written policy states that “you
must keep your radio on while on break and respond when called to, even if during your break.”
DISCUSSION
As referenced above, plaintiffs’ principal claim is under the Wage Act, G.L. c. 149,
§ 148. Plaintiffs also claim that Longwood’s failure to count the thirty minute meal breaks as
compensable, working time affected whether their hours per week exceeded forty. They allege
that the meal break time should be counted and, as a result, in some weeks they failed to receive
overtime pay in violation of G. L. c. 151, § 1A. For both claims,2 the issue is whether the meal
break time should be counted as compensable, working time.
The Wage Act mandates that an employer pay its employees “the wages earned” within a
certain time period. The statute does not define “wages earned.” The Massachusetts Department
of Labor Standards, however, promulgated applicable regulations. In 2003, the regulations were
codified at 455 Code Mass. Reg. §§ 2.00 et seq. In January 2015, the regulations were re-codified
at 454 Code Mass. Regs. § 27.01 et seq. The regulations were codified “[t]o clarify practices and
policies in the administration and enforcement of the Minimum Fair Wages Act.” Id. While the
Minimum Fair Wages Act refers to c. 151 of the General Laws ( see, § 22 of c. 151), Longwood
does not dispute that the regulations apply to plaintiffs’ Wage Act claim under c. 149. See
1 According to plaintiffs, Longwood assumes that officers take a thirty minute meal break
per shift and “automatically” deducts thirty minutes from hours worked. Longwood denies the
allegation but fails to state how it accounts for the unpaid meal breaks. SMF ¶ 79. It is
undisputed that the meal breaks are unpaid.
2 Plaintiffs also assert common law claims for breach of contract and unjust enrichment.
3
Longwood’s Reply to Plaintiffs’ Opposition to Defendants’ Motion for Summary Judgment, p.
2.3
The regulations define “Working Time” at 454 Code Mass. Regs. § 27.02:4
Includes all time during which an employee is required to be on the employer’s
premises or to be on duty, or to be at the prescribed work site or at any other
location, and any time worked before or after the end of the normal shift to
complete the work. Working time does not include meal times during which an
employee is relieved of all work-related duties. Working time includes rest
periods of short duration, usually 20 minutes or less. (Emphasis added).
In addition, 454 Code Mass. Regs. § 27.04 provides the following:5
All on-call time is compensable working time unless the employee is not required
to be at the work site or another location, and is effectively free to use his or her
time for his or her own purposes.
Plaintiffs submit that these regulations and the predecessor regulations at 455 Code Mass. Regs.
§ 2.01 (the “regulations”) constitute the governing law with respect to the test to apply for
determining whether the thirty minute meal break provided by Longwood must be paid as wages
earned.
In Taggart v. Town of Wakefield, 78 Mass. App. Ct. 421 (2010), the Appeals Court
considered the regulations as a source of authority for determining whether certain types of hours
worked should be counted for the purposes of a claim for wages earned under the Wage Act,
3 See also, G.L. c. 23, § 1, empowering the department with authority and responsibility
over the administration and enforcement of c. 149, as well as c. 151.
4 The definition of “Working Time” in 455 Code. Mass. Regs. § 2.01 is identical in all
material respects. The definition in § 2.01 does not include the last sentence of § 27.02, and
omits a phrase irrelevant to the issue of this case.
5 The definition of on-call time in 455 Code. Mass. Regs. § 2.01 is “[a]n on-call employee
who is not required to be at the work site, and who is effectively free to use his or her time for his
or her own purposes, is not working while on call.”
4
G.L. c. 149, § 148. “Generally, the types of activities that are considered to be hours worked and
compensable are defined through the State regulatory process. The division of occupational
safety (DOS or division) administers and interprets the Minimum Fair Wage Law, G.L. c. 151,
and the regulations promulgated pursuant to that statute.” Id. at 423, citing the regulations. The
Appeals Court then noted that “[w]e apply the same rules of construction to regulations as to
statutes, and accordingly ascribe the ordinary and common meanings to undefined terms.” Id. at
425 (citation omitted). See also, DeSaint v. Delta Air Lines, Inc., 2015 WL 1888242 at *9 (D.
Mass. (O’Toole, J.) 2015)(applying the same Massachusetts “working time” regulations to claim
under Wage Act).
The definition set forth in the regulations for “working time” is exactly what plaintiffs
contend is the applicable test to determine whether their unpaid thirty minute meal time is
compensable as wages earned. There is no ambiguity that would cause the court to go any
further.6 The thirty minute meal time is compensable unless the employee is relieved of all workrelated
duties. It will be for the finders of fact to determine the terms, rules and practices of
plaintiffs’ employment and whether plaintiffs were relieved of all work-related duties during
their meal breaks. The regulations provide the governing law. Global NAP’s, Inc. v. Awiszus, 457
Mass. 489, 496 (2010)(“a properly promulgated regulation has the force of law and must be
6 I disagree with the federal court in Raposo v. Garelick Farms, LLC, 2014 WL
2468815*8 (D. Mass. 2014) that “all work-related duties” is a term that does not have a plain
meaning.
5
given the same deference accorded to a statute”).78
Longwood counters with arguments based entirely on federal law developed under the
Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq. Longwood cites several decisions of
federal courts of appeal9 and district courts holding that the test for whether an unpaid meal break
is compensable time is the predominant test. See e.g., Babcock v. Butler County, 806 F. 3d 153,
156 (3d Cir. 2015)(adopting the predominant benefit test which asks “whether the officer is
primarily engaged in work-related duties during meal periods” quoting Armitage v. City of
Emporia, 982 F. 2d 430, 432 (10th Cir. 1992)).
A combination of two reasons, unique to federal law, appears to underlie the adoption of
the predominant test by some federal courts. First, the federal cases reference a decades-old
decision of the United States Supreme Court interpreting the FLSA, Armour & Co. v. Wantock,
323 U.S. 126, 133 (1944). In Armour, the Court affirmed a judgment in favor of employees
seeking to be paid for time when they were on-call and on premises. In doing so, the Court stated
“[w]hether time is spent predominantly for the employer’s benefit or for the employee’s is a
question dependent upon all the circumstances of the case.” Id. The second reason arises from
the nature of a federal regulation. In 1961, the United States Department of Labor issued a
regulation to interpret the FLSA standard. In 29 C.F. R. § 785.19, the DOL stated that an
7 Longwood does not challenge that the regulations were properly promulgated.
8 Plaintiffs also cite opinion letters from the Department of Labor Standards and the
Attorney General supporting the conclusion that the applicable test is “relieved from all duties.”
Such letters are entitled to substantial deference by this court. Global NAP’s Inc., 457 Mass. at
496-497.
9 The United States Court of Appeals, First Circuit has apparently not rendered a decision
as to which test to apply under the FLSA or Massachusetts law.
6
employee “must be completely relieved from duty” to have a bona fide, unpaid meal time.
Federal courts adopting the predominant test have “eschewed a literal reading of a Department of
Labor regulation.” Babcock, 806 F. 3d at 156. That is because the federal regulations, unlike the
Massachusetts regulations under G.L. c. 149, § 148, are considered for guidance, only, and not as
controlling law. O’Hara v. Menino, 253 F. Supp. 2d 147, 153 (2003).
Longwood urges this court to adopt the predominant test. It points to Massachusetts
authority holding that, in general, G.L. c. 151, § 1A was “intended to be essentially identical to”
the FLSA. Mullally v. Waste Management of Massachusetts, Inc., 452 Mass. 526, 531 (2008).
Longwood argues that this question of how to define working time should come out the same
way as under the FLSA. But the Supreme Judicial Court’s analysis in Mullally is illustrative. The
Court, having referenced the FLSA, proceeded to look to the Massachusetts regulations (455
Code Mass. Regs. § 2.02 (3)) to determine the relevant issue (calculation of base pay) not FLSA
precedent. Id. at 534-535. Stated another way, where the plain, unambiguous language of the
Massachusetts statute and the Massachusetts regulations governs the legal standard for liability,
there is no reason to draw on FLSA interpretation. See Goodrow v. Lane Bryant, Inc., 432 Mass.
165, 169-170 (2000)(where neither the Massachusetts statute nor the corresponding regulation, or
any Massachusetts appellate decision, defines a key term, the court should apply the common
meaning of words, legislative history, and then to interpretations of analogous federal statutes,
for guidance).
Here, the definition of “Working Time” in the Massachusetts regulations is unambiguous.
No further interpretive guidance is necessary or appropriate. The governing law is the “relieved
of all work-related duties” test as defined in the regulations.
7
CONCLUSION
Longwood’s argument for summary judgment depends entirely on the court adopting the
predominant test. In addition, Longwood’s motion to decertify the class is based on adoption of
the predominant test. Having rejected that test, both motions are DENIED.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
December 23, 2016
8

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Wildlands Trust of Southeastern Massachusetts, Inc., et al. v. Cedar Hill Retreat Center, Inc., et al. (Lawyers Weekly No. 12-174-16)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2016-01432-BLS2
WILDLANDS TRUST OF SOUTHEASTERN MASSACHUSETTS, INC. &
JOHN AND CYNTHIA REED FOUNDATION,
Plaintiffs
vs.
CEDAR HILL RETREAT CENTER, INC. &
BALLOU CHANNING DISTRICT UNITARIAN UNIVERSALIST ASSOCIATION, INC.,
Defendants
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’ MOTIONS TO DISMISS
This is an action seeking to enforce a Conservation Restriction imposed on real property located in Duxbury, Massachusetts (the Premises). Plaintiffs are the Wildlands Trust of Southeastern Massachusetts, Inc. (Wildlands Trust) and the John and Cynthia Reed Foundation (the Foundation). Plaintiffs allege that the current owner of the land, defendant Cedar Hill Retreat Center, Inc. (Cedar Hill), is engaging in commercial activities in violation of the Conservation Restriction. Also named as a defendant is the Ballou Channing District Unitarian Universalist Association, Inc. (Ballou Channing), the original owner of the land and the Grantor of the Conservation Restriction. Plaintiffs allege that the Foundation made a $ 3 million gift to Ballou Channing in exchange for Ballou Channing’s agreement to create the Conservation Restriction and to use the Foundation’s donation to preserve the Premises in conformity with that restriction (the “Gift Agreement”).
The case is now before this Court on the defendants’ motions to dismiss pursuant to Mass. R. Civ. P. 12(b) (1) and Mass. R. Civ. P. 12(b)(6). Ballou Channing moves to dismiss all
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counts asserted against it; Cedar Hill moves to dismiss some but not all of the counts against it. The motions raise difficult questions, some of which would benefit from discovery and cannot be decided at this early stages in the case. Still, there are certain claims that are not supported by the facts alleged in the Complaint or the applicable law, and which must therefore be dismissed, for reasons set forth below.
BACKGROUND
The Complaint contains the following allegations which, for purposes of these motions, are assumed to be true. The Foundation is a private charitable foundation created by John and Cynthia Reed. The Reeds are abutters to the Premises, which consists of 12.23 acres of land. Ballou Channing is a nonprofit religious corporation organized pursuant to Chapter 180 of the General Laws. Ballou Channing acquired the Premises in 1980 through a Deed of Gift that imposed certain restrictions on its use. Located on the Premises are a building and improvements that have historically been known as the Cedar Hill Retreat Center. Ballou Channing would periodically permit the center to be used by its member congregations.
In 2007, the Reeds learned that the restrictions imposed on the Premises through the Deed of Gift were to expire within the next couple of years. Thee Reeds wished to preserve the Premises in conformity with those original restrictions; negotiations with Ballou Channing ensued. Ultimately, the Foundation and Ballou Channing entered into what the Complaint calls the “Gift Agreement,” whereby the Foundation would make a contribution of $ 3million in return for the creation of a Conservation Restriction. It was understood between the parties that the $ 3 million donation would alleviate the need to engage in any commercial activities on the Premises and cover what was anticipated to be Ballou Channing’s “annual operating expenses” in maintaining it. Ballou Channing had represented to the Foundation that those expenses were
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about $ 100,000 to $ 150,000 per year. There is no allegation in the Complaint that the Gift Agreement was reduced to writing.
The Conservation Restriction was reduced to writing and is attached to the Complaint as Exhibit A. It is dated October 17, 2008 and was recorded with the Plymouth County Registry of Deeds. Ballou Channing is named as the Grantor in the Conservation Restriction; the Grantee was the plaintiff Wildlands Trust, a non-profit organization dedicated to conservation and preservation of land in Southeastern Massachusetts. The stated purpose of the Conservation Restriction is to preserve the Premises “in its predominately natural, scenic wooded and open space condition” and to prohibit any use of the Premises not in conformity with that purpose. Section III of the Conservation Restriction sets forth what uses are prohibited and what are permitted. Section VIII (entitled “Assignability”) makes it clear that the burden the Conservation Restriction imposes “shall run with the Premises in perpetuity” and “shall be enforceable against Grantor and the successors, licensees and assigns of the Grantor holding any interest in the Premises.” In January 2009, Ballou Channing created Cedar Hill, a 501(c) (3) organization, to own and operate the Premises. Ballou Channing transferred the Premises to Cedar Hill by a Quit Claim Deed which specifically references the Conservation Restriction. The Quit Claim Deed also states that the Premises are subject to an easement that granted each congregation that is a member of Ballou Channing the right to use the Premises so long as that use does not violate any term of the Conservation Restriction. The Quit Claim Deed is attached to the Complaint as Exhibit B. It was recorded with the Plymouth County Registry of Deeds on December 31, 2009.
Neither the Quit Claim Deed nor the Conservation Restriction mention the Foundation’s $ 3 million gift. The plaintiffs contend, however, that the parties intended that the money would
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be transferred over to any subsequent owner of the premises so as to maintain the land in conformity with the limitations on its use. Ballou Channing knew this, but when it conveyed the Premises to Cedar Hill, Ballou Channing kept $ 1.6 million of the $ 3 million gift for itself and only conveyed $ 1.4 million to Cedar Hill.
Cedar Hill used a portion of the $ 1.4 million to renovate a structure on the Premises and proceeded to use the building as a rental property, advertising its availability to the public for overnight stays at a fee. In collecting fees for this use and permitting activities on the Premises such as food preparation, alcohol consumption, weekend family reunions, and other social uses, Cedar Hill has (according to the Complaint) violated the terms of the Conservation Restriction. The Complaint alleges that Ballou Channing is aware of Cedar Hill’s violations and has refused to take steps to end them. The Complaint does not allege that Ballou Channing has through the use of its easement itself violated the Conservation Restriction.
DISCUSSION
The standard that this Court applies to the instant motions is well established. This Court is required to accept as true the allegations contained in the Complaint, drawing all inferences in favor of the plaintiff. This deference to the nonmoving party, however, is not unbounded. To withstand a motion to dismiss under Mass. R. Civ. P. 12(b) (6), the Complaint must contain “allegations plausibly suggesting (not merely consistent with) an entitlement to relief . . . .” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-557 (2007). Although a Complaint need not set forth detailed factual allegations, a plaintiff is required to present more than labels and conclusions and must raise a right to relief “above the speculative level.” Id.
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The Complaint in the instant case alleges the following counts, each of them brought by both plaintiffs and asserted against both defendants: breach of the Gift Agreement (Count I); breach of the Conservation Restriction (Count II); promissory estoppel (Count III); unjust enrichment (Count IV); breach of Chapter 93A (Count V). Ballou Channing’s Motion targets all five counts, whereas Cedar Hill seeks to dismiss all counts except for Count II. Because there is substantial overlap in the arguments that each defendant makes, this Court’s discussion will focus on each count rather than divide the discussion up between the two motions.
A. Breach of the Gift Agreement (Count I)
According to the Complaint (as read in the light most favorable to the plaintiffs), the Foundation entered into an agreement with Ballou Channing whereby Ballou Channing would create the Conservation Restriction and would use a $ 3 million donation by the Foundation to maintain the land so as “to preserve the ecological and aesthetic condition of the Premises in perpetuity.” Although Ballou Channing did indeed create the Conservation Restriction, it did not use the $ 3 million donation as promised, instead creating a separate entity (Cedar Hill) to hold title to the land and keeping at least $ 1.6 million of the donated funds to use for its own purposes unrelated to conserving the Premises. This Court concludes that, notwithstanding Ballou Channing’s numerous arguments to the contrary, this does state a claim against Balllou Channing. It does not state a claim as to Cedar Hill, however, who is not alleged to be a party to the Gift Agreement and cannot be sued on the theory that it was a third party beneficiary. By way of explanation, this Court addresses each of the arguments made by the defendants as to why this claim should be dismissed.
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1. Standing
Both defendants contend that the plaintiffs do not have standing to bring this claim which arises from the allegations that Ballou Channing failed to use the Foundation’s $ 3 million donation as promised. In support, plaintiffs rely on G.L.c. 12 §8, which states that the Attorney General “shall enforce the due application of funds given or appropriated to public charities within the commonwealth and prevent the breaches of trust in the administration thereof.” That statute has been interpreted to bar individual plaintiffs from challenging the manner in which a charitable institution has managed or used its money. See e.g. Garland v. Beverly Hospital Corp., 48 Mass.App.Ct. 914 (1999) (plaintiff who had donated funds to defendant hospital had no standing to claim that defendant misused funds); Weaver v. Wood, 425 Mass. 279 (1997) (individual members of Christian Science church had no standing to contest decision of the defendant to expand its publishing activities into electronic media and use church funds in connection therewith); Dillaway v. Bulton, 256 Mass. 568 (1926) (trustees under a will that bequeathed money to defendant had no standing to bring claim that money was being used contrary to the purposes set forth in the will itself); Judkins v. Hyannis Public Library Association, 302 Mass. 425 (1939) (same). In each of those cases, the appellate courts held that only the Attorney General can bring an action alleging the misuse of charitable assets. The courts reasoned that G.L.c. 12 §8 conferred exclusive power on the Attorney General to represent those who assert a beneficial interest in a charity. “It has not left it to individuals to assume this duty, or even to the court to select a person for its performance.” Weaver v. Wood, 425 Mass. at xx.
The Supreme Judicial Court has recognized an exception to this rule, however, where the individual plaintiff asserts a special interest distinct from the more general public interest
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protected by the Attorney General. That exception was most clearly defined by the Supreme Judicial Court in Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235 (2007), which arose from the defendant’s decision to close a church in Wellesley. The plaintiffs there were members of a family that had provided land on which the church was built. The land had been given to the defendant on the specific condition that it be used as the site of a church. Joining in the case as a co-plaintiff was a parishioner who had given money to the defendant based on its representation that it would use the money for that same purpose. Although the SJC ultimately agreed with the lower court that the case had to be dismissed because it challenged decisions protected by the First Amendment, it nevertheless concluded that all of the plaintiffs did have standing. It reasoned that the plaintiffs’ claims were “readily distinguishable from those of the general class of parishioner-beneficiaries” in that each of the plaintiffs had made contributions to the defendant – land in one case and money in another – which they would not have made had they known that the defendant would close the church. “These claims are personal, specific and exist apart from any broader community interest in keeping [the church] open.” 449 Mass. at 245.
In the instant case the Complaint (read generously) alleges that the Foundation made the $ 3 million donation for the specific purpose of maintaining the Premises in a certain way. Ballou Channing breached that agreement by failing to use the donation as promised. Had the Foundation known that Ballou Channing would keep a large portion of that money for itself to use for purposes unrelated to conserving the land, that donation would not have been made. The Foundation thus has a specific interest that is unique to it and distinct from the interests of the public or of Ballou Channing’s congregation members. That is enough in this Court’s view to confer the Foundation with standing. If the funds were intended for Wildland Trust, then it can
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join with the Foundation as a plaintiff in asserting a claim against Ballou Channing for breach of the Gift Agreement, provided that sufficient facts surface in the course of discovery to show that it was the intended (as opposed to incidental) third party beneficiary of the Gift Agreement.1
This Court does not reach the same conclusion on Count I insofar as it is asserted against defendant Cedar Hill, however. Cedar Hill was not a party to the Gift Agreement. It therefore made no promises that could be breached. That it is bound by the Conservation Restriction as a result of purchasing the land does not mean that it was obligated to spend money it received from Ballou Channing in any particular way. Although plaintiffs contend that Cedar Hill is properly named as a party because it was a third party beneficiary of the Gift Agreement, they rely on case law that permits a person who is the intended beneficiary of a contract entered into by others to maintain an action where he or she has been deprived of that benefit. See James Family Charitable Foundation v. State Bank and Trust Co., 80 Mass.App.Ct. 720, 724-725 (2011) (discussing intended beneficiary theory as set forth in Restatement (Second) Contracts 302-315.) Here, the plaintiffs attempt to use that doctrine to bring Cedar Hill in as a defendant. This Court sees no legal basis for such a claim and accordingly orders that Count I be dismissed as to Cedar Hill.
2. Statute of Frauds
Even if the plaintiffs have standing, the Foundation contends Count I must be dismissed because the Complaint contains no allegation that the Gift Agreement was in writing so that it does not comply with the Statute of Frauds. G.L.c. 259 1. That statute requires a writing, signed by the party to be charged, if the contract cannot be performed in one year. Here, the
1 This issue should be revisited by way of a motion for summary judgment when more details about the Gift Agreement have been revealed. In contrast to an intended beneficiary, an incidental beneficiary obtains no right to enforce a contract. Restatement (Second) contracts 315.To determine whether a beneficiary is intended, rather than merely incidental, the court must look to the intent of the parties, taking into account the language of the contract and the circumstances surrounding its formation. See James Family Charitable Foundation v. State Street bank and Trust co., 80 Mass.App.Ct. 720 (2011) and cases cited therein.
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Complaint alleges that the $ 3 million donation was to be used to preserve the land in “perpetuity;” the Gift Agreement could not be performed within one year so that the Statute of Frauds does indeed apply. The question is whether it is appropriate at this early stage in the case to dismiss Count I on this basis. This Court concludes that it is not.
In so concluding, however, this Court is not persuaded that the writing necessary to satisfy the Statute of Frauds is the Conservation Restriction, as plaintiffs seem to suggest. Ballou Channing, in compliance with its promise to the Foundation, did create the Conservation Restriction; the breach of the Gift Agreement consisted of the manner in which Ballou Channing used the $ 3 million donation. The Conservation Restriction makes no mention of that donation much less that any amount of money was earmarked for use in connection with it. In opposing Cedar Hill’s Motion, the plaintiffs maintain that discovery will indeed turned up documents sufficient to satisfy the Statute of Frauds and that they should at least be given an opportunity to conduct that discovery, particularly since the Gift Agreement as described in the Complaint was “extensively negotiated” over a period of months. Whether they will be successful or not can be tested by way of a motion for summary judgment.
Chapter 93A
Cedar Hill argues that the Chapter 93A claim in Count V should be dismissed because the plaintiffs have not alleged that Cedar Hill was a party to any transaction with either plaintiff and because Cedar Hill was not involved in trade or commerce with the plaintiffs. In their Complaint, the plaintiffs allege that, in contravention of its 501(c) (3) tax exempt status, Cedar Hill has and continues to operate a commercial, revenue-generating enterprise on the Premises
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and that its conduct in knowingly using a portion of the Foundation’s $ 3 million gift for unintended uses in conjunction with its refusal to comply with the Conservation Restriction is conduct that comes within the purview of Chapter 93A. This Court disagrees.
Under G.L. c. 93A, “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” G.L. c. 93A, § 2(a). Consumer plaintiffs may bring a 93A claim provided they first make a pursuit demand on the defendant. No demand letter is necessary under G.L. c. 93A, § 11 but then that section applies only to those plaintiffs who are themselves engaged in trade or commerce. Because there is nothing to indicate that plaintiffs made any pre-suit demand as required by G.L.c. 93A 9, this Court must assume that the plaintiffs are bringing their Chapter 93A claim under Section 11.2 There are no facts in the Complaint, however, to suggest that Wildlands Trust or the Foundation were engaged in the conduct of any trade or commerce.
In determining whether a party is engaged in trade or commerce, this Court may consider the character of the party, the nature of a transaction, the activities engaged in by the party, and also whether the transaction was motivated by business or personal reasons. Begelfer v. Najarian, 381 Mass. 177, 191 (1980). ). As described in the Complaint, the Foundation is a private charitable foundation and that Wildlands Trust is a non-profit organization dedicated to conserving land and preserving the natural heritage of Southeastern Massachusetts. There are no facts in the Complaint to suggest that the Foundation or Wildlands Trust have conducted any trade or commerce. Accordingly, the 93A claim must be dismissed.
2 Nothing in the Complaint, including Exhibit C, a letter from the plaintiffs to the defendants dated February 26, 2016 (entitled “Cedar Hill Conservation Restriction” and authored by sophisticated legal counsel), suggests that the plaintiffs sent the defendants a Chapter 93A demand letter. See G.L. c. 93A, § 9(3) (“At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent”). Notably, the plaintiffs never referenced Chapter 93A or described specific “unfair or deceptive” acts or practices in the February 26, 2016 letter.
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Ballou Channing’s Motion to Dismiss
Ballou Channing separately moves to dismiss Counts I through V of the plaintiffs’ Complaint pursuant to Mass. R. Civ. P. 12(b)(6). Ballou Channing’s arguments in support of its motion are similar to some of the arguments Cedar Hill raised, and are resolved in line with the court’s reasoning as explained above, with the following offered by way of brief explanation.
First, Ballou Channing claims that both plaintiffs, Wildlands Trust and the Foundation, have no standing to bring Counts I (breach of contract related to the gift agreement), III (promissory estoppel), and IV (unjust enrichment) and that those claims must be dismissed.3 Like Cedar Hill, Ballou Channing , argues that the Attorney General has the exclusive authority to enforce the proper application of funds by a public charity and that the plaintiffs’ claims in this action do not fall under certain limited exceptions to this general rule. See Ballou Channing’s Memorandum at 5-6. As discussed above, this Court concludes that, taking the allegations in the the Compalint as true, the plaintiffs have a personal and specific interest in this dispute against both defendants so as to have standing to pursue their claims, at least at this juncture. Indeed, Ballou Channing appears to concde as much in fottnote 3 of it memorandum; whether the personal nature of that interest and the use fot eFoudnation fundt to prtect that interest violates the INternanl Revuenue Code is (ate least for the purposes of standing) irrelevant.
Second, Ballou Channing argues that Counts I (breach of contract related to the Gift Agreement), III (promissory estoppel), and IV (unjust enrichment), should be dismissed because the claims are barred by the Statute of Frauds. Ballou Channing argues that the Conservation Restriction does not address Ballou Channing’s use of the $ 3 million donation and that no
3 Cedar Hill argues that only the Foundation lacks standing to bring its claims in this action.
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writing memorializes the purported Gift Agreement, which Ballou Channing states was never documented by a writing. AS explained above, discovery is necessary to determine wheehr that is indeed true,, howeve.r
Third, Ballou Channing moves to dismiss Count II (breach of contract related to the Conservation Restriction) on the grounds that it cannot be compelled to comply with the Conservation Restriction because it no longer owns the land, having transferred the Premises to Cedar Hill. The Compalint alleges, hwoever, that Ballou Channing is bound by the terms of the Conservation Restriction and remains obligated to ensure that it is complied with. Palintiffs also ntoed that Ballou Channing maintains an easement interest in the Premises, reinforcing this ongoing obligation of compliance. They contend that Ballou Channing’s failure to enforce the terms of the Conservation Restriction and enter into mediation to potentially resolve the instant disputes are in breach of these obligations.
This Court declines to dismiss Count II against Ballou Channing at this time. Ballou Channing is the “Grantor” of the Conservation Restriction, which is attached to the Complaint as Exhibit A. The Conservation Restriction states that, “The burdens of this Conservation Restriction shall run with the Premises in perpetuity, and shall be enforceable against Grantor and the successors, licensees and assigns of Grantor holding any interest in the Premises.” Conservation Restriction at Section VII.A. The dispute resolution provision of the Conservation Restriction also specifically requires the parties (Grantor and Grantee) to “participate in at least three hours of mediation” if prior negotiations of any disputes are unsuccessful; Ballou Channing is the named Grantor of the Conservation Restriction. Whether Count II should be dismissed against Ballou Channing cannot be resolved without a more developed factual record regarding
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Ballou Channing’s actions or inactions thus far related to the instant dispute. Accordingly, Ballou Channing’s request to dismiss Count II is denied.
Finally, Ballou Channing moves to dismiss Count V, a claim under Chapter 93A, arguing that it was not acting in a business context or conducting any trade or commerce such that Chapter 93A should apply to it in this action. This Court agrees. As discussed above, this Court concludes that the plaintiffs’ Chapter 93A claim in Count V is based on G.L. c. 93A, § 11 because there are no factual allegations in the Complaint suggesting that the plaintiffs sent the defendants a Chapter 93A demand letter, which is required under G.L. c. 93A, § 9(3). Section 11 requires the plaintiffs to be engaged in the conduct of trade or commerce, and as discussed above, there are no facts in the Complaint to suggest that Wildlands Trust or the Foundation were engaged in the conduct of any trade or commerce. As a consequence, Count V must also be dismissed as to Ballou Channing.
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CONCLUSION AND ORDER
For all of the foregoing reasons, Defendant Cedar Hill Retreat Center, Inc.’s Motion to Dismiss is ALLOWED as to Count V (violation of Chapter 93A) and is otherwise DENIED, and Defendant Ballou Channing District Unitarian Universalist Association, Inc.’s Motion to Dismiss is ALLOWED as to Count V (violation of Chapter 93A) and is otherwise DENIED.
______________________________
Janet L. Sanders
Justice of the Superior Court
Dated: December 12, 2016

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Stemgent, Inc. v. Orion Equity Partners, et al. (Lawyers Weekly No. 12-176-16)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2013-2212-BLS2
STEMGENT, INC.,
Plaintiff
vs.
ORION EQUITY PARTNERS, ORION EQUITY PARTNERS, LLC
and MARK CARTHY,
Defendants
FINDINGS OF FACT, RULINGS OF LAW
AND ORDER OF JUDGMENT
This case arises from events leading up to plaintiff Stemgent Inc.’s acquisition of another company, Asterand. The defendant Mark Carthy through Orion Equity Partners (Orion) was one of the competing bidders for Asterand’s business.1 Stemgent brought this lawsuit alleging that Carthy tortiously interfered with an exclusive negotiation agreement between Stemgent and Asterand and that as a result of Carthy’s improper conduct, Stemgent was forced to pay a higher price for Asterand’s assets than it would have without such interference. Stemgent alleges that this conduct also constituted an unfair and deceptive business practice in violation of Chapter 93A. The case came before this Court for jury waived trial in October 2016. This Court concludes that judgment should enter for the defendants, the plaintiff having failed to prove that Carthy had an improper motive or used improper means in connection with his competing bid.
1 Because Carthy and Orion are one and the same, and Orion did not become a limited liability company until after events in this case, this Court sees no reason to distinguish between the three defendants and will refer only to Carthy.
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FINDINGS OF FACT
Asterand is a leading provider to scientists of high quality human tissue and tissue based research solutions. At the time of events in this case, it had two parts to its business, one located in Detroit, Michigan where human tissue was collected, stored, and prepared for shipping (the Tissue Business) and a second research arm located in the United Kingdom known as Bioseek. In 2011, Asterand received notices of default on $ 9 million of debt to two secured lenders. With insufficient funds to pay off the debt, Asterand made a decision to sell its assets. Initially, it sought to sell both parts of its business, then elected to sell each part separately on parallel tracks.
To assist it in the sale, Asterand engaged Covington Associates (Covington), a Boston based investment banking firm. Steven Mermelstein was the Covington employee assigned to Asterand, although its managing director Chris Covington also played a role. On January 8, 2012, Covington sent out an instruction letter to potential bidders that outlined the bidding process. Among other things, the letter instructed bidders not to contact Asterand or its affiliates directly but to work through Covington.
One of the potential bidders receiving this letter was the defendant Mark Carthy. Carthy had worked in various corporate positions before ending up at Oxford Biosciences (Oxford) in 2000. There, Carthy was involved in making venture capital investments in bioscience companies, first as a venture partner and then as general partner. As a consequence of his work at Oxford, Carthy became familiar with Asterand, which Oxford had founded and funded; he also became friends with Asterand’s first CEO, Randall Charlton, and dealt on occasion with
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Asterand’s then CEO Jack Davis, who had also consulted with Oxford. In 2008, Carthy left Oxford and formed his own venture capital firm, first known as Orion Healthcare Equity Partners and then Orion Equity Partners.
The plaintiff Stemgent received an instruction letter from Covington at the same time that Carthy received his letter. Stemgent was formed in 2007. Its focus was on developing research tools for the pharmaceutical industry. Its largest shareholder was Health Care Ventures, a firm that invested in biotech companies, principally those working on the development of drugs for human use. Stemgent’s president is Gus Lawlor, who was also a board member for Health Care Ventures. Unlike Carthy, Lawlor had had no prior dealings with anyone at Asterand, although like Carthy, he was, on behalf of his investors, quite interested in purchasing the company.
On January 23, 2012, Carthy submitted the first of what would be several offers to buy Asterand’s Tissue Business. The offer was submitted on Orion Equity Partners letterhead and stated that its “principals” had 25 years in the life sciences field. This was not technically accurate since at that point, Orion was simply a name under which Carthy did business and was neither a partnership nor at that time a limited liability company. Carthy had, however, collected information about Asterand from his contacts with former Asterand officers, including Charlton, and continued to work closely with both Charlton and another former Asterand officer, John Stchur, throughout the period during which he sought to acquire Asterand. Moreover, the label of Orion as a partnership did not affect in any material way Asterand’s consideration of the offer: Davis knew Carthy and regarded Orion as a responsible bidder.
Shortly thereafter, Stemgent entered the bidding, and on February 21, 2012, proposed to buy the Tissue Business for $ 7 million. The letter did not have a financing contingency, stating that the funds necessary to finance the purchase would be provided by Stemgent’s current
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investors. Like Carthy, Stemgent proposed to purchase the Tissue Business free of liabilities; in other words, any security linked to Asterand’s $ 9 million debt had to be discharged. The offer was, however, considerably higher than Carthy’s January 23 offer, which was for $ 6 million. Undaunted, Carthy submitted two more revised offers to purchase the Tissue Business. The second of the two, on March 27, 2012, was for “$ 7.6. Million in cash.”
These two revised offers (and all offers submitted by Carthy after that) dispensed with any financing contingency or any requirement regarding due diligence. Carthy testified that he fully expected to have in place financing through certain Michigan based entities on or before any closing date; this Court finds this testimony credible. Moreover, Carthy had the ability to draw on personal assets which he held jointly with this wife, an investment banker. that totaled $ 30 million. If need be, he was willing to draw on those assets to go through with any purchase if his bid were accepted.
With Orion’s higher offer in hand, Mermelstein pressed Stemgent to raise its offer to $ 7.7 million in return for Asterand’s shutting down the bidding process. Stemgent did. On March 28, 2012, Stemgent and Asterand entered into a Letter of Intent (LOI). The LOI was essentially an agreement between the parties to work diligently over the next sixty days to negotiate and then execute a definitive asset purchase agreement. So that those negotiations could go forward without distractions, the LOI contained a provision – typical in such transactions– which prohibited Asterand or any of its representatives from soliciting or encouraging the submission of any competing offers until May 23, 2012 or until a final agreement was executed, whichever date was earlier. See Section 7
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of LOI, admitted as Trial Exhibit 9. 2 The LOI also prevented Asterand from accepting any other proposals, and if it did receive any inquiry about buying the company, required it to promptly inform Stemgent.
Carthy learned that Asterand had entered into a period of exclusive negotiations with a competing bidder on March 30, 2012. He nevertheless continued to submit offers to buy Asterand’s Tissue Business. Thus, on April 10, 2012, he submitted an $ 8.1 million bid; Mermelstein informed Lawlor of Stemgent about this. Carthy also reached out directly and indirectly (through Charlton, who was working with Carthy) to Asterand representatives as well as to some of its investors to make sure they were aware of his bids. He submitted at least one of his bids directly to Asterand’s board, with Chris Covington’s blessing. All of these offers were unsolicited.
Carthy’s efforts intensified around the beginning of May. On May 2, 2012, Asterand publicly announced that a potential bidder for its Bioseek business had withdrawn. Although the announcement stated that the company “continues to make good progress” on the sale of the Tissue Business, it cautioned that the proceeds from that sale may not be sufficient to satisfy the company’s outstanding debt. The development regarding Bioseek thus put some pressure on Asterand to realize as much as it could from the sale of the Tissue Business. Sensing an advantage, Carthy that same day increased his offer to $ 9 million in cash, and an additional $ 2 million in royalties to be paid later. This offer was submitted through Covington. Clearly
2 The specific text in the LOI was as follows:
Seller [Asterand] shall not, nor shall Seller authorize or permit any of its officers, directors, stockholders, employees, affiliates, investment bankers, advisors, representatives, and agents, directly or indirectly, to (a) solicit, initiate, propose or knowingly encourage the submission of any proposal (“Proposal”); or b) participate in any discussions or negotiations regarding, or furnish to any person or entity any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Proposal.
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tempted by this offer, Davis informed Asterand’s board of directors about it and also informed Lawlor of this latest offer. Davis was convinced (as he was throughout that time period in which Carthy was submitting offers) that Stemgent’s was the better offer, since he knew that it had full financing firmly in place. But he was nevertheless happy to use Carthy’s offer to get Stemgent to “sweeten the pot.”
Mermelstein met with Lawlor on May 4, 2012 and informed him of Carthy’s latest offer. Displeased, Lawler had Stemgent’s counsel sent to Carthy a “cease and desist” letter informing him that his proposal was intruding on the LOI’s exclusive negotiations period. Lawlor nevertheless decided to increase Stemgent’s offer to $ 8 million for the Tissue Business and an additional $ 1 million to Bioseek in the form of a note. Davis responded that Asterand would wait out the “exclusivity period” (due to expire May 23) unless the offer was for $ 9 million. Although these negotiations included a discussion of Carthy’s latest offer (Lawler regarding it as a credible one even if its sources of financing were not clear), the fact that the deal to sell Bioseek had fallen through was also quite relevant, since the Asterand’s $ 9 million debt needed to be paid off if Stemgent was going to acquire the Tissue Business free of liabilities. Moreover, Stemgent had independently done its own financial analysis of the Tissue Business and (as Lawlor would later inform Stemgent’s investors), the higher figure proposed by Asterand was not out of line with the value that Stemgent had assigned to the assets at issue.
On May 18, 2012, Stemgent and Asterand signed an Amendment to the LOI, raising the purchase price to $ 9 million and extending the exclusivity period to June 15, 2012. On June 10, 2012, Stemgent and Asterand entered into a contract for the acquisition of the Tissue Business for $ 9 million. The transaction closed on July 30, 2012. As it turned out, the Tissue
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Business was not a good investment. The damages that Stemgent seeks are the difference between what it originally offered ($ 7.7 million) and what it ultimately paid.
CONCLUSIONS OF LAW
Stemgent asserts two claims against Carthy. Count I and II allege that he tortiously interfered with the contractual or advantageous business relationship between Stemgent and Asterand. Count III alleges a violation of Chapter 93A. This Court concludes that the plaintiff has failed to prove an essential element of the tortious interference counts, and that, as to Count III , it has failed to prove that Carthy engaged in the kind of conduct that rises to that level of rascality sufficient to constitute an unfair act or deceptive practice.
The parties agree as to the elements of a tortious interference claim. Stemgent must prove, by a preponderance of the evidence that: a) that it had a binding contract or advantageous business relationship with Asterand; b) Carthy knew about that relationship and intentionally induced or persuaded Asterand not to perform its obligations under the contract or to break that relationship; c) Carthy’s interference was, in addition to being intentional, improper in motive or in means; and d) Stemgent was harmed by Carthy’s actions. See G.S. Enterprises Inc. v. Falmouth Marine, Inc. 410 Mass. 262, 273 (1991); see also Pembroke Country Club Inc. v. Regency Savings Bank, F.S.B. 62 Mass.App.Ct. 34 (2004); Melo-Tone Vending, Inc. v. Sherry, Inc., 39 Mass.App.Ct. 315, 319-320 (1995).
As to the first element, there can be little dispute: the LOI established a contractual relationship which among other things, committed Asterand to a sixty day exclusive negotiation period. During that period Asterand was not to solicit or encourage the submission of any offers from third parties or take any other action to that could reasonably be expected to lead to or facilitate the submission any such proposal. See footnote 1, supra.
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As to the second element, this Court finds and concludes that Carthy knew about this contractual relationship and at least as of March 30, 2012, knew about the exclusive negotiation period that the LOI described. Although he may not have received a copy of the actual LOI and may not have known (at least initially) that Stemgent was the offeror, he knew that Asterand was forbidden from engaging in any discussions with him that would in any way assist him in submitting a competing offer. The closer question is whether Carthy’s conduct actually induced Asterand to breach its contractual obligations. In particular, there is no evidence to suggest that Asterand solicited the offers from Carthy. However, there is evidence that Chris Covington assisted Carthy in submitting at least one of his offers to Asterand’s Board of Directors. Moreover, Asterand clearly used Carthy’s offers as leverage in its negotiations with Stemgent in an effort to get it to “sweeten the pot” and thus had every incentive to encourage Carthy. From this, there is a basis to infer that Asterand played more than a passive role and actually facilitated Carthy’s submissions of competing proposals, in violation of Section 7 of the LOI.
The plaintiff is unable to satisfy the third element of its claim, however, which it is that Carthy used improper means or had an improper motive.3 This Court reaches that conclusion in light of case law defining precisely what it is that the plaintiff must show – and also what is not enough. Something more than intentional interference is required; that is, the interference resulting in injury must be “wrongful by some measure beyond the fact of the interference itself.” United Truck Leasing Corp. v. Geltman, 406 Mass. 811, 816 (1990). A party’s “legitimate advancement of its own economic interest” is not sufficient to satisfy this element. Pembroke Country Club v. Regency Sav. Bank, F.S.B. 62 Mass.App.Ct. at 39. That is, “a competitor may ‘interfere’ with another’s contractual expectancy by picking the deal off for
3 The existence of fact disputes as to this issue was the reason why this Court (Salinger, J.) denied cross motions for summary judgment in this case. See Memorandum of Decision and order dated June 7, 2016.
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himself if, in advancing his own interest, he refrains from employing a wrongful means.” Doliner v. Brown, 21 Mass. App.Ct. 692, 695 (1986), citing Restatement (Second) of Torts, 768 (1979). As to improper motive, that requires proof of “actual malice” which has in turn been defined to mean that defendant acted with a “spiteful malignant purpose” unrelated to the some legitimate interest. King v. Driscoll, 418 Mass. 576, 587 (1994); see also Brewster Wallcovering Co, v. Blue Mt. Wallcoverings, Inc. 68 Mass.Ap.Ct. 582, 608 (2007). That the defendant was motivated by a desire to benefit financially is not sufficient.
There is no evidence that Carthy had an improper motive in submitting his competing bids. Based on his familiarity with Asterand from his days at Oxford and the connections he had developed with its former officers and directors, Carthy regarded the Tissue Business as a good investment. There was evidence that he genuinely believed that the company was worth more than what Stemgent was offering, and submitted higher bids in an effort to gain the competitive edge. In short, Carthy was motivated by his own economic self- interest – which was to acquire the Tissue Business.
This Court also concludes that the plaintiff has failed to prove that Carthy used improper means. He removed the financing condition from his offers because he wanted to make his bids more attractive. He took his case directly to Asterand’s board of directors because he wanted to make sure they fully considered his competing offers. Plaintiff’s arguments notwithstanding, there is no evidence that in these communications, Carthy falsely represented that Stemgent was being given preferential treatment because of its connection to one Asterand investor. Nor does the evidence support a finding that Carthy did not have the financial wherewithal to fund his offers: he did, if only through his personal holdings. Plaintiff makes much of the fact that Orion consisted of only Carthy, and that there were no other partners or principals, as his offers
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stated. But both Davis of Asterand and Lawlor of Stemgent took Carthy’s offers seriously not because they were submitted under the name of Orion Equity Partners but because they were themselves familiar with Carthy and regarded his offers as credible.
More generally, this Court does not regard the fact that Carthy knew about the exclusive negotiations agreement when he submitted his offers as sufficient to sustain this element regarding improper means, particularly in the context of this case. All parties were sophisticated in these types of negotiations, with the ability to access all the information that they needed to determine what bargaining position to take. More important (and directly relevant to the fourth element of this claim which requires Stemgent to prove a causal connection to the complained of harm), this Court is not convinced that Carthy’s conduct played a major role in Stemgent’s decision to raise its bid. Certainly, it could have held firm, relying on the fact that it was well funded and much further along in the due diligence process than Carthy, thus making its offer more attractive to Asterand. At the same time, it recognized that Asterand was under some pressure to consummate the sale (the Bioseek bid having collapsed), and that it could seal the deal for the Tissue Business with an offer that alleviated Asterand’s concerns regarding the $ 9 million debt. That Carthy had come in with a higher offer may have played a part in how these negotiations unfolded, but Stemgent was fully capable of assessing how that should affect its valuation of Asterand. It made the decision that it did with full knowledge of what its options were and chose to increase its offer not just because of Carthy but because it concluded that the price that it was willing to pay was in its own economic self-interest.
For the same reasons, this Court concludes that plaintiff has failed to prove a violation of Chapter 93A. Although Stemgent points out that it could still prevail on this claim even if it failed to prove tortious interference, it relies on the same facts and those facts simply do not
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support the conclusion that Carthy’s conduct was egregious enough to constitute an unfair or deceptive act or practice. Thus, although unfair acts include material misrepresentations of fact, there were no such material misrepresentations here. More generally, there is no evidence that Carthy’s conduct was so objectionable as to attain that “level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” Massachusetts School of Law at Andover Inc., v. American Bar Assn, 142 F.3d 26, 41-42 (1st Cir. 1998), quoting Levings v. Forbes & Wallace, Inc., 8 Mass.App.Ct. 498 (1979).
Accordingly, it is hereby ORDERED that judgment enter for the defendants as to all Counts and that the Complaint be DISMISSED, with prejudice.
_____________________________________ Janet L. Sanders
Justice of the Superior Court
Dated: December 21, 2016

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In re Ovascience, Inc. Stockholder Litigation (Lawyers Weekly No. 12-177-16)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIV. NO. 15-03087 BLS 2
(Consol. With 16-0645)
IN RE OVASCIENCE, INC. STOCKHOLDER LITIGATION
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’ MOTION TO DISMISS
This is a putative class action brought pursuant to Sections 11, 12 and 15 of the Securities Act of 1933. Plaintiffs are investors who purchased stock in the defendant Ovascience, Inc. (Ovascience or the Company). They allege that a Registration Statement issued in connection with a secondary offering of Ovascience stock on January 8, 2015 (the January 8 Offering), contained false statements and material omissions of fact concerning an experimental fertility treatment (AUGMENT) that Ovascience was in the process of developing. In addition to suing Ovascience, plaintiffs have also named as defendants certain of the Company’s officers and directors (collectively, the Ovascience defendants) as well as three investment banks, J.P. Morgan, Credit Suisse and Leerink Partners, which were the underwriters in the January 8 Offering (the Underwriters). The case is now before the Court on the defendants’ Motion to Dismiss pursuant to Rule 12(b) (6), Mass.R.Civ.P. After careful review of the parties’ submissions, the Court concludes that the Motion should be DENIED. This memorandum sets forth a brief explanation of the reasons for that decision.
The defendants makes two argument in support of their motion. First, they contend that the Complaint fails to allege sufficient facts, under the standard set forth in Iannachino v. Ford Motor Co., 451 U.S. Mass. 623 (2008), that the Registration Statement contained material
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misrepresentations.1 This Court disagrees. The Complaint sets forth detailed allegations that the Registration Statement contained misleading statements or failed to include material facts regarding: 1) the science behind AUGMENT; 2) the success rate; 3) the reason why the Company undertook its studies outside of the United States; and 4) the profitability of the Company. Plaintiffs allege that, as a result of the falsely optimistic picture the Registration Statement painted regarding AUGMENT’s prospects as a fertility treatment, stocks prices for Ovascience briefly shot up (with certain of the individual defendants profiting from that rise), then sharply declined when the facts regarding AUGMENT emerged just a few months later – facts that were known at the time the Registration Statement issued. This more than satisfies the requirement that the Complaint set forth facts “plausibly suggesting (not merely consistent with) an entitlement to relief…” Iannacchino, supra, quoting Bell Atl. Corp. v. Twombly, 550 Mass. 544, 555 (2007).
The second argument concerns the issue of standing. The claims are brought pursuant to Section 11, 12 and 15 of the Securities Act. In order to have standing to bring a claim under Section 11, a plaintiff must have purchased shares either in the offering in question or, if the shares were purchased in an aftermarket, they must be “traceable” to the offering at issue. Where a company has made more than one stock offering, it may be quite difficult for a plaintiff to meet Section 11’s standing requirement. Standing is even more difficult to demonstrate if the claim is asserted under Section 12, which imposes liability only on a “seller” as defined by the statute. A “seller” includes a non-owner (like an underwriter) if the defendant solicited the purchase, motivated at least in part by its own financial interest. See Pinter v Dahl, 486 U.S. 622
1 There have been three iterations of the complaint since this case began. This Court looks to the most recent one, entitled “Class Action Complaint for Intervention for Violation of the Securities Act of 1933, filed November 4, 2016.
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(1988). However, the plaintiff must show a direct connection between the purchase and the offering in question. Language that the shares were purchased “pursuant and/or traceable to” the offering documents is not enough. Plumbers Union Local No. 12 v. Nomura Asset Acceptance Corp., 632 F.3d 762 (1st Cir.) 2011) (affirming dismissal of Section 12 claim for lack of standing); See also ARIAD Pharmaceuticals, Inc. Securities Litigation, No. 15-1491, 2016 U.S. App. LEXIS 21235, ___F.3d___ (Nov. 28, 2016) (affirming dismissal of Section 11 claim where plaintiff alleged only that shares were traceable to the offering).
In the instant case, the Complaint alleges that all plaintiffs purchased stock “pursuant and/or traceable to” the January 8 Offering. Relying on Nomura and ARIAD, defendants argue this is insufficient to give the plaintiffs standing to bring this case. Ovascience points out that, at the time of the Offering, there were over 24 million shares of Ovascience outstanding; it argues that, because the Registration Statement related to a secondary offering, some greater level of specificity is required. See In re Century Aluminum Securities Litigation, 729 F.3d 1105, 1107 (9th Cir. 2013) (if it is only “possible” that the plaintiff purchased the stock in the offering, that is not enough to confer standing under Section 12).
If the Complaint alleged only that plaintiffs’ shares were traceable to the January 8 Offering, the defendants would be correct. But as to plaintiff Westmoreland, it alleges more, stating that Westmoreland purchased its stock on the day of the January 8 Offering and at the Offering price. This Court concludes that these additional facts are sufficient to permit a reasonable inference that Westmoreland purchased its stock directly in the Offering, so as to have standing under both Section 11 and section 12. 2 With at least one named plaintiff
2 The Complaint also asserts a claim against the individual defendants under Section 15, which imposes secondary liability on “control persons.” Given this Court’s ruling on the Section 11 and Section 12 claim, the Section 15 claim also survives.
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(Westmoreland) having satisfied standing requirements, dismissal of this class action is not warranted under Rule 12(b) 6).
____________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: December 22, 2016

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Posted by Stephen Sandberg - December 30, 2016 at 10:06 pm

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Adams v. Congress Auto Insurance Agency, Inc. (Lawyers Weekly No. 11-177-16)

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; SJCReporter@sjc.state.ma.us

15-P-452                                        Appeals Court

MARK ADAMS  vs.  CONGRESS AUTO INSURANCE AGENCY, INC.

No. 15-P-452.

Middlesex.     March 10, 2016. – December 21, 2016.

Present:  Kafker, C.J., Vuono, & Henry, JJ.

Negligence, Insurance company, Employer, Foreseeability of harm, Causation, Retention of employee, Entrustment, Emotional distress.  Damages, Emotional distress.  Consumer Protection Act, Responsibility of employer.  Practice, Civil, Summary judgment, Motion to amend.

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Posted by Stephen Sandberg - December 21, 2016 at 4:16 pm

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Chambers, et al. v. RDI Logistics, Inc., et al. (Lawyers Weekly No. 10-187-16)

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; SJCReporter@sjc.state.ma.us

SJC-12080

TIMOTHY P. CHAMBERS[1] & another[2]  vs.  RDI LOGISTICS, INC., & another;[3] DEE & LEE, LLC, & another,[4] third-party defendants.

Bristol.     October 5, 2016. – December 16, 2016.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Independent Contractor Act.  Federal Preemption.  Statute, Federal preemption, Severability.  Practice, Civil, Summary judgment, Standing.  Employment, Retaliation.  Protective Order.

Civil action commenced in the Superior Court Department on September 20, 2013.

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Posted by Stephen Sandberg - December 17, 2016 at 1:22 am

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