Posts tagged "Outdoor"

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

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1884CV00268-BLS2
____________________
MASSACHUSETTS BAY TRANSPORTATION AUTHORITY
v.
CLEAR CHANNEL OUTDOOR, INC.
____________________
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR PRELIMINARY INJUNCTION
This lawsuit arises from the imminent expiration of a 15-year license agreement under which Clear Channel Outdoor, Inc., has been operating billboards on property owned by the Massachusetts Bay Transportation Authority. The MBTA recently issued a request for responses by parties willing to enter into a six month license to operate the same billboards after the current license expires. The MBTA received bids from Outfront Media LLC, which agreed to enter into a six-month license, and Clear Channel, which refused to accept a term that short. The MBTA disqualified Clear Channel. It then awarded a six-month license to Outfront Media.
The MBTA brought this suit seeking declarations that its request for responses was lawful, Clear Channel is not entitled to enforce its right of first refusal, and Clear Channel is contractually obligated to transfer the disputed billboards as well as whatever permits are needed to operate the billboards to the MBTA.
Clear Channel has asserted counterclaims alleging that the MBTA breached the existing contract by offering a new license on terms that are not commercially reasonable and by not allowing Clear Channel to exercise its contractual right of first refusal, and that Clear Channel therefore has no contractual obligation to transfer the billboard structures to the MBTA at the end of the current license term.
The MBTA now seeks a preliminary injunction that would bar Clear Channel from interfering with any use of the billboards on MBTA property, or terminating or otherwise disposing of its existing permits for billboards on MBTA property. Clear Channel seeks a preliminary injunction that would bar the MBTA from proceeding with the new license it has issued to Outfront Media or otherwise interfering with Clear Channel’s ownership of billboard structures and associated permits. The Court will ALLOW the MBTA’s motion and DENY Clear Channel’s motion.
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1. Legal Background.
1.1. The Public Interest in MBTA Advertising Revenues. The MBTA is a governmental entity, established by the Legislature as a “political subdivision of the commonwealth” that consists of 65 cities and towns within the MBTA’s service area. G.L. c. 161A, § 2 (political subdivision) & § 1 (defining the cities and towns within the “area constituting the authority”). The MBTA is now governed by the board of directors of the Massachusetts Department of Transportation. Id. § 3.
“The MBTA’s essential function is to provide mass transportation services” in the greater Boston metropolitan area. See Massachusetts Bay Transp. Auth. v. City of Somerville, 451 Mass. 80, 86 (2008).
The MBTA obtains most of its operating funds from taxes collected by the Commonwealth, fares paid by people who use the MBTA’s services, and assessments on cities and towns. See Boston Globe Media Partners, LLC v. Retirement Bd. of Mass. Bay Transp. Auth. Ret. Fund, Suffolk Sup. Ct. no. 1484CV01624, 33 Mass. L. Rptr. 374, 2016 WL 915300, at *9 (Mass. Super. Ct. 2016) (Salinger, J.); G.L. c. 10, § 35T (requiring portion of state sales tax revenue, plus assessments on cities and towns within the MBTA, to be deposited in Massachusetts Bay Transportation Authority State and Local Contribution Fund and disbursed to MBTA); G.L. c. 161A, § 9 (providing for assessments on cities and towns within the MBTA).
In addition, the Legislature has directed the MBTA to “establish and implement policies that provide for the maximization of nontransportation revenues from all sources.” G.L. c. 161A, § 11. For example, the Legislature has authorized the MBTA “[t]o sell, lease or otherwise contract for advertising in or on the facilities of the authority.” Id. § 3(n).
The MBTA is therefore “required by statute to maximize its revenues from commercial advertising,” including outdoor advertising on billboards and similar structures. MBTA v. Somerville, 451 Mass. at 86-87. This is because the “income that the MBTA generates, directly or indirectly, from commercial advertising in and on MBTA facilities and properties … is used by the MBTA to help defray the costs of its transportation operations.” Id. at 86. “These revenues also affect the fares charged by the MBTA, for the MBTA is generally to take ‘all necessary steps to maximize
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nontransportation revenues … before implementing fare increases.’ ” Id. at 87, quoting G.L. c. 161A, § 11. In sum, “[r]evenue raised through advertisements is statutorily integrated with the MBTA’s ability to provide mass transportation services, its essential function.” Id. at 87.
The Supreme Judicial Court has determined that any interference with the MBTA’s “ability to raise revenue” through commercial advertising on its property “would interfere with action that is related to the MBTA’s essential function.” Id.
1.2. Standards for Granting Preliminary Injunctive Relief. The MBTA and Clear Channel are seeking preliminary injunctions to enforce contractual rights allegedly established their 2003 license agreement regarding the use of billboard structures located on MBTA property. The parties’ current dispute arises from the MBTA’s solicitation of bids for and awarding of a new license. The MBTA contends that the bid process and award will help achieve the statutorily-mandated policy of maximizing non-transportation revenues discussed above. See G.L. c. 161A, § 11.
Under these circumstances, to obtain preliminary injunctive relief the moving party must prove that (1) it is likely to succeed on the merits of its claims, and (2) the requested relief will promote or at least will not adversely affect the public interest. See LeClair v. Town of Norwell, 430 Mass. 328, 331-332 (1999).
Unlike in lawsuits involving purely private interests, “a showing of irreparable harm is not required” because the MBTA is seeking “to enforce a statute or a declared policy of the Legislature.” Id. at 331 (designer selection statute); accord Fordyce v. Town of Hanover, 457 Mass. 248, 255 n.10 (2010) (public bidding statutes); Edwards v. City of Boston, 408 Mass. 643, 646-647 (1990) (uniform procurement act); Commonwealth v. Mass. CRINC, 392 Mass. 79, 89 (1984) (enforcement of bottle bill).
2. Findings of Fact. The Court makes the following findings based on the portions of the affidavits submitted by the parties that it finds credible, and on reasonable inferences it has drawn from those facts.
The Court does not credit Clear Channel’s affidavits to the extent they contain opinions regarding the commercial reasonableness of the MBTA’s recent request for responses for a new billboard license, or to the extent that they contain any other statements or opinions that are inconsistent with any of the findings or analysis in
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this decision. In deciding a motion supported by sworn affidavits, “the weight and credibility to be accorded those affidavits are within the judge’s discretion” and “[t]he judge need not believe such affidavits even if they are undisputed.” Commonwealth v. Furr, 454 Mass. 101, 106 (2009). An affidavit “is a form of sworn testimony the credibility of which is to be determined by the judge.” Psy-Ed Corp. v. Klein, 62 Mass. App. Ct. 110, 114, rev. denied, 442 Mass. 1114 (2004).
2.1. The Existing License. In 2003 the MBTA granted Clear Channel a 15-year license to operate billboards on MBTA property. That license will expire on March 3, 2018.1 The written license agreement also includes the following provisions, among others.
Clear Channel agreed to pay the MBTA 20 percent of the gross revenues that Clear Channel receives in exchange for providing outdoor advertising on most of the licensed billboards, and to pay 40 percent of gross revenues for a few other billboards, all subject to certain minimum guarantees. In practice, over the 15-year life of this contract Clear Channel has paid the MBTA roughly 34 percent of the gross revenue generated by these billboards, because the minimum annual guarantee has exceeded 20 percent of revenue each year.
The 2003 license provides (in ¶ 10) that if Clear Channel wanted to continue to use the billboard structures after the 15-year license term ended, and the MBTA “at its discretion” agreed, then Clear Channel would continue to have a license to use the billboards on a month-to-month basis. That month-to-month use could be terminated by either party at any time on sixty-days advance written notice. And the terms of the continuing month-to-month license would otherwise be the same as the 2003 license, except that the guaranteed minimum fee would increase by the same percentage increase in the specified consumer price index.
Clear Channel agreed (in ¶ 4.1 of the contract) that at the end of its license term it would transfer ownership of all of its structures located on T property to the MBTA. This obligation was subject to the condition that Clear Channel had “secure[d] 1 The parties previously submitted two different versions of their license, one stating that it after March 3, and the other saying March 5. At oral argument the MBTA represented that the parties have now agreed that the existing license term ends on March 3, 2018.
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the full and complete enjoyment of all rights granted by this License” for the original 15-year contract term. The contract provided that if the contract were terminated early, then Clear Channel would remove its structures from MBTA property.
The parties also agreed (in ¶ 4.2) what would happen if the MBTA opted not to extend the existing license. The contract provides that the MBTA may solicit bids or offers for a license of the billboard structures that are the subject of Clear Channel’s existing license. It specifies that the MBTA retains full discretion to solicit such bids or offers “under such terms and conditions” that the MBTA decides are “in the best interests of the MBTA.”
And the parties agreed that Clear Channel would have a right of first refusal as part of any bidding process for a successor license to use the billboard structures. The contract specifies that Clear Channel’s “right of first refusal is expressly conditioned on” Clear Channel “making an initial bid or offer in response to the MBTA’s solicitation and/or request for offers.” If Clear Channel satisfies this condition precedent, then before awarding any bid, or accepting any proposal to license the billboard structures, the MBTA must provide notice to Clear Channel “of all material terms and conditions offered by any such third person’s bid or proposal.” Clear Channel would then have three days “to notify the MBTA that it accepts each and every term and condition offered by such third person.” If Clear Channel were to do so, then the 2003 contract requires that Clear Channel “shall be awarded and be bound by a license with the same terms and conditions” offered by the other bidder.
Clear Channel has obtained from the Massachusetts Office of Outdoor Advertising all permits necessary to operate the MBTA billboards that are covered by the 2003 license. Some of these permits are for so-called “non-conforming” but “grandfathered” billboards that do not comply with current state or federal regulations but may nonetheless be permitted because they have been “continuously permitted … and utilized since their erection.” See 700 C.M.R. § 3.01 (definition of non-conforming and/or grandfathered sign).
2.2. The RFR Process. The MBTA retained a consultant in 2017 to help analyze how the MBTA could best maximize the revenues it earns from its billboard
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assets. The consultant advised that Clear Channel’s current license fee is “among the lowest in revenue return in the public sector.” It also told the MBTA that other public sector entities with similar billboard license arrangements “have minimum revenue share thresholds of 50% of gross revenues with some being as high as 70%.”
The MBTA decided that it did not want to extend Clear Channel’s existing license because the license fee was far too low. It also decided that it did not want to enter into a long-term license at this time, because it first wanted to evaluate the feasibility of converting existing static billboards to digital billboards.
The MBTA decided to seek proposals for a six-month contract, that the MBTA could extend in its discretion, in order to give it time to study the feasibility of digital billboards and to issue a new request for proposals for a digital contract if the MBTA decided that would be the best way to maximize its non-transportation revenues.
On November 29, 2017, the MBTA released Request for Response No. 150-17 (the “RFR”), which sought proposals to license and operate static billboards on MBTA properties.
The RFR specifies various terms for the new license. It proposes a license that would last for six months,2 with additional three-month terms available at the MBTA’s discretion. It explicitly requires that the new licensee must agree that, at the end of the license term, it will transfer all then-existing permits, advertising contracts, and related agreements for the billboards to the MBTA or its designee. The RFR also requires bidders to offer to pay the MBTA at least fifty percent of gross billboard revenues, and includes detailed requirements for information-sharing and reporting.
When the MBTA issued this RFR it reasonably anticipated that, if the new license were awarded to a company other than Clear Channel, the new licensee would be able to procure all necessary new permits from the Massachusetts Office of
2 In its counterclaim, Clear Channel expressly alleges that “the RFR proposes a license term of six months.” By law, Clear Channel is bound by its own factual allegations. See G.L. c. 231, § 87 (allegations “[i]n any civil action pleadings … shall bind the party marking them”). This statute provides that “facts admitted in pleadings” are “conclusive upon” the party making them. Adiletto v. Brockton Cut Sole Corp., 322 Mass. 110, 112 (1947).
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Outdoor Advertising to operate the licensed billboards either before the new license takes effect or shortly thereafter. The Court credits the testimony by the MBTA’s Deputy Director of Advertising that the MBTA understands and anticipates that a new licensee would be able to obtain permits for all of the licensed billboard sites even if they are non-conforming but grandfathered sites.3
The MBTA received two bids, one from Outfront Media LLC and one from Clear Channel.
Outfront agreed to accept all material terms set forth in the RFR. It offered to pay the MBTA 52.5 percent of gross billboard revenues during the contract term.
Clear Channel did not agree to the MBTA’s terms. To the contrary, Clear Channel indicated that it would not sign any new license with a six-month term and that it would not agree to transfer billboard permits to the MBTA or its designee at the end of the new license terms. Instead, Clear Channel proposed negotiating a longer term and proposed that it would transfer only new permits that it acquired during the term of the new license.
The MBTA informed Clear Channel that its proposal was not responsive because Clear Channel did not agree to comply with all terms and conditions specified in the RFR. The MBTA gave Clear Channel an opportunity to amend its bid to accept the six-month and permit-turnover requirements. Clear Channel declined to do so.
The MBTA then disqualified Clear Channel’s bid for failure to comply with material requirements.
On January 26, 2018, the MBTA awarded a new six-month license to Outfront Media. This license will take effect on March 4, 2018, immediately after Clear Channel’s existing license ends. The Court finds that both the MBTA and Outfront Media anticipate that whenever the new license terminates, Outfront Media will have obtained and thus will have to transfer to the MBTA or its designee permits to operate all of the licensed billboards.
3 See Declaration of Yanni Poulakis, ¶¶ 37-41. Clear Channel’s assertion during oral argument that the MBTA presented no evidence on this point is incorrect.
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The MBTA never gave Clear Channel any opportunity to exercise its right of first refusal. On the other hand, Clear Channel had already made clear that it would not accept the six-month and permit-transfer terms of Outfront’s proposal.
3. Likelihood of Success on the Merits. The Court concludes that: (i) the MBTA is likely to succeed on its claim that its request for responses was lawful, and Clear Channel is unlikely to succeed on its counterclaim that the RFR was commercially unreasonable and breached the implied covenant of good faith and fair dealing; (ii) the MBTA is likely to succeed on its claim that Clear Channel did not satisfy a condition precedent to the exercise of its right of first refusal, and Clear Channel is unlikely to succeed on its claim that the MBTA has committed a breach of contract by not giving Clear Channel the opportunity to exercise that right of first refusal; and (iii) the MBTA is likely to succeed on its claim that Clear Channel must comply with its contractual obligation to transfer the billboard structures to the MBTA.
3.1. Commercial Reasonableness of the Request for Responses. Clear Channel asserts that the MBTA violated its implied covenant of good faith and fair dealing by issuing a Request for Responses that included commercially unreasonable terms in a bad faith attempt to deprive Clear Channel of any meaningful opportunity to exercise its contractual right of first refusal. The Court is not convinced that Clear Channel has any likelihood of succeeding on this claim. To the contrary, the MBTA is likely to succeed in winning a declaration that its RFR is and was lawful.
3.1.1. The MBTA’s Duty to Offer Reasonable Terms. Like all contracts in Massachusetts, the parties’ 2003 license agreement includes an implied covenant of good faith and fair dealing. See, e.g., Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014). This implied covenant provides “that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract….” Id., quoting Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 385, 348 N.E.2d 763 (1976).
The MBTA has an obligation under the implied covenant to protect Clear Channel’s “ability to exercise its Right of First Refusal in an effective manner.” Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 381 (2004). In other words, the MBTA “was prohibited from obstructing” Clear Channel’s right
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of first refusal. Id. at 384. For example, the MBTA would violate the implied covenant of good faith if it solicited offers that include a “poison pill” provision designed solely to discourage Clear Channel from exercising its right of first refusal. See, e.g. Beckett v. Jewish Cemetery Ass’n of Mass., Middlesex Sup. Ct. Civ. no. 2007-1670-A, 28 Mass. L. Rptr. 100, 2011 WL 831676, * 5-*6 (Mass. Sup. Ct. 2011) (Wilkins, J.); David A. Bramble, Inc. v. Thomas, 914 A.2d 136, 149 (Md. 2007); Kennedy v. Dawson, 989 P.2d 390, 396-397 (Mont. 1999).
This does not mean that the MBTA was required to solicit offers on terms to which Clear Channel was willing to agree. To the contrary, the license agreement between Clear Channel and the MBTA specifies, in the same right-of-first-refusal provision upon which Clear Channel relies, that the MBTA could “publish a solicitation of bids” to license the billboards after Clear Channel’s contract expires “under such terms and conditions deemed to be in the best interests of the MBTA.”
This express contractual term is consistent with the common law rules that govern rights of first refusal. As courts in other jurisdictions have explained, “the owner of property subject to a right of first refusal remains master of the conditions under which he will relinquish his interest, as long as those conditions are commercially reasonable, imposed in good faith, and not specifically designed to defeat the preemptive rights.” Roeland v. Trucano, 214 P.3d 343, 350 (Alaska 2009), quoting West Texas Transmission, LP v. Enron Corp., 907 F.2d 1554, 1563 (5th Cir.1990) (applying Texas law).
Clear Channel’s assertion that two particular terms of the RFR were not commercially reasonable, were not imposed in good faith, and thus must have been designed to defeat Clear Channel’s right of first refusal is not convincing.
3.1.2. The Six-Month Term. To begin with, Clear Channel complains that the MBTA proposed a new license with a six-month term, rather than a license with a much longer duration. Clear Channel asserts that a six-month term is not commercially reasonable because a new licensee would not have sufficient time to obtain permits for the signs or to market and sign contracts for advertising on the signs, and could not secure more valuable, longer term contracts for the signs.
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If these criticisms were true, they would merely suggest that Clear Channel would have an unfair advantage in performing under a six-month extension—not an unfair disadvantage—because it already has permits for the signs, and (according to Clear Channel) it has already entered into long-term contracts that extend beyond the termination of its existing license agreement.
In any case, Outfront Media has agreed to a six-month license. It will therefore be hard for Clear Channel to establish that the MBTA’s request for responses was a charade, rather than a good faith effort to enter into a short, six-month lease of the billboards for reasons that make sense to the MBTA and Outfront even if they make no sense to Clear Channel. Clear Channel is unlikely to be able to show that terms that a competitor has agreed to accept are commercially unreasonable.
Furthermore, Clear Channel previously agreed, in the 2003 license, that come March 2018 Clear Channel could continue to operate under the existing license on a month-to-month basis if both side agreed. Given that Clear Channel previously agreed to potential month-to-month extensions, it is unlikely to succeed in proving that a six-month extension is designed solely to frustrate Clear Channel’s ability to exercise its right of first refusal.
The Court concludes that the MBTA is likely to succeed in proving that it acted in good faith to impose the six-month term, because it expects to need a relatively short amount of time to evaluate whether to seek to convert any existing billboard structures to electronic, digital displays. Clear Channel is therefore unlikely to succeed in showing that this provision was included in the RFR in bad faith, as a poison pill designed only to convince Clear Channel not to bid and therefore not to exercise its right of first refusal.
3.1.3. The Permit Transfer Provision. In addition, Clear Channel argues that it was unfair for the MBTA to require that any company wishing to bid on a new license must agree that, at the end of the license term, it will transfer to the MBTA all permits to operate billboard or sign structures on MBTA property. Clear Channel reasons that because it holds permits for all the existing MBTA structures, including some that are non-conforming but grandfathered, and a new licensee would necessarily start out with no permits for these structures, it necessarily follows that
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this requirement would unfairly force Clear Channel to relinquish something of great value that a new licensee does not have and cannot transfer. Once again, the Court is not persuaded.
As the Court found above, when it issued the RFR the MBTA reasonably anticipated and expected that any new licensee would be able to procure all necessary new permits to operate the licensed billboards, even with respect to structures that are non-conforming but grandfathered.
Thus, Clear Channel is unlikely to succeed in proving that the MBTA intended to unfairly disadvantage Clear Channel by including the permit-transfer condition in the RFR. To the contrary, it appears that the MBTA reasonably expects that by the end of the six-month term any new licensee would be in the same position as Clear Channel would be, i.e. holding permits to operate all of the billboard structures (including the non-conforming, grandfathered ones) that it would have to transfer to the MBTA or its designee at the conclusion of the new license term, as an agreed-upon condition of the license. The mere fact that Clear Channel has permits in place today, and Outfront does not, does not show that the permit-transfer condition is a bad faith attempt to disadvantage Clear Channel.
3.2. Clear Channel’s Right of First Refusal. The MBTA is likely to succeed on its claim that Clear Channel is not entitled to enforce its contractual right of first refusal because it did not satisfy a contractual condition precedent.
The 2003 license agreement provides that Clear Channel’s “right of first refusal is expressly conditioned on [Clear Channel] making an initial bid or offer in response to the MBTA’s solicitation and/or request for offers.”
The Court concludes that this provision unambiguously established a condition precedent to the exercise of Clear Channel’s right of first approval, the meaning of which is a question of law for the Court to decide. See generally Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002) (“If a contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.”); Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (“Whether a contract is ambiguous is also a question of law.”); Indus Partners, LLC v. Intelligroup, Inc., 77 Mass. App. Ct. 793, 795 (2010) (“ambiguity is not created
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simply because a controversy exists between parties, each favoring an interpretation contrary to the other’s.”) (Quoting Jefferson Ins. Co. v. Holyoke, 23 Mass. App. Ct. 472, 475 (1987)).
3.2.1. The Condition Requires a Responsive Bid. The Court construes this provision to mean that Clear Channel was required, as a condition of being able to exercise its right of first refusal, to submit a bid that was responsive to the MBTA’s RFR, in the sense that Clear Channel made a bid in which it agreed to accept all material terms and conditions set forth in the RFR.
Under Massachusetts law any government entity that undertakes a public bidding process must “consider only those bids that conform to the specifications issued,” even if the bidding process is not required or governed by statute. Cataldo Ambulance Service, Inc. v. Chelsea, 426 Mass. 383, 388 (1998) (imposing such a condition as a matter of common law “in the interest of fairness,” even though the Uniform Procurement Act exempts contracts for ambulance service from the statute’s requirements; see id. at 384 n.3, G.L. c. 30B, § 1(24)). After all, the whole point of a competitive bidding process “is ‘to establish genuine and open competition after due public advertisement in the letting of contracts for … (public) work, to prevent favoritism in awarding such contracts and to secure honest methods of letting contracts in the public interests.’ ” Datatrol Inc. v. State Purchasing Agent, 379 Mass. 679, 696 (1980), quoting Morse v. Boston, 253 Mass. 247, 252 (1925).
It would make little business sense for the parties to have agreed in their 2003 license agreement that Clear Channel must participate in the bid process as a condition for exercising its right of first refusal, but that a non-responsive bid in which Clear Channel rejects material terms of the RFR would count as participation. And the Court must construe this contract in manner that gives it “effect as … rational business instrument[s]” and that “will carry out the intent of the parties.” Robert and Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016)) (quoting Starr v. Fordham, 420 Mass. 178, 192 (1995)).
Furthermore, “[t]o allow a bidder to furnish his own specifications for any material part of the contract in question would destroy genuine and fair competition and be subversive of the public interests.” Datatrol, 379 Mass. at 697, quoting Sweezy
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v. City of Malden, 273 Mass. 536, 542 (1931). Thus, reading this provision in the manner advocated by Clear Channel would violate the principle that the Court must construe the parties’ contract in a manner that would promote and be consistent with the public interest, not in a way that subverts the public interest. See Department of Revenue v. Estate of Shea, 71 Mass. App. Ct. 696, 702, rev. denied, 451 Mass. 1109 (2008); Restatement (Second) of Contracts § 207 (1981).
3.2.2. Clear Channel’s Bid Was Not Responsive. Although Clear Channel submitted a bid in response to the MBTA’s recent RFR, Clear Channel expressly stated that it would not agree to a six-month license term and would not agree to transfer to the MBTA or its designee at the end of the license term any then-existing permits to operate the billboard structures. The terms that Clear Channel refused to accept were both material.
The MBTA gave Clear Channel a second chance to submit a responsive bid that would accept all of the material terms established in the RFR. Clear Channel refused to do so.
As a result, Clear Channel forfeited its right of first refusal. The submission of a responsive bid accepting all material terms of the MBTA’s RFR was a contractual condition precedent to the exercise of that right. The condition was not satisfied.
Clear Channel argues that “even if the 2003 License silently demanded a fully acquiescent response, Clear Channel was still within its rights to take the exceptions it did” because the terms it declined to accept were commercially unreasonable and designed in bad faith to keep Clear Channel from exercising its right of first refusal. This argument fails for the reasons discussed above. The MBTA is likely to succeed in showing that the six-month term and the permit-transfer requirement were commercially reasonable and not unfair to Clear Channel.
3.3. Clear Channel’s Obligation to Transfer the Billboards. The MBTA is likely to succeed on its claim to enforce Clear Channel’s contractual obligation to transfer the existing billboard structures to the MBTA at the end of the current license term. Conversely, Clear Channel is unlikely to succeed on its counterclaim that this contract provision is unenforceable.
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Clear Channel correctly notes that, under ¶ 4.1(a) of the 2003 license agreement, its obligation to transfer the billboard structures is only triggered “in the event that” Clear Channel “secures the full and complete enjoyment of all rights granted by this License” for the full fifteen year contract term.
Based on this language, Clear Channel then argues that it never enjoyed all rights granted by this License because the MBTA never gave Clear Channel an opportunity to exercise its contractual right of first refusal.
Clear Channel is unlikely to prevail on this issue. Clear Channel never had any right under the 2003 license agreement to exercise a right of first refusal without first submitting a fully responsive bid, which never occurred. As explained above, the right of first refusal was subject to a condition precedent, that Clear Channel submit a bid in which it agreed to accept all material terms and conditions set forth in the MBTA’s request for responses. Clear Channel never satisfied that condition. As a result, the first refusal provision never ripened into a right that Clear Channel was entitled to exercise. Cf. Louis M. Herman Co. v. Gallagher Elec. Co., 334 Mass. 652, 654 (1956) (where approval of architect and engineer was condition precedent to order becoming a contract, lack of such approval meant that order never ripened into a contract).
Since it appears likely that the MBTA will succeed in enforcing Clear Channel’s contractual obligation to transfer the billboard structures, it follows that the MBTA could likely show that any deliberate attempt by Clear Channel to interfere with the continued use of those structures by the MBTA’s new licensee for outdoor advertising—either by dismantling, removing, or otherwise disposing of the structures themselves, or by terminating Clear Channel’s existing permits to use those structures for outdoor advertising before the MBTA or its new license have a reasonable opportunity to seek and obtain new permits—would violate the implied covenant of good faith and fair dealing.
4. Public Interest. The MBTA has demonstrated that the preliminary injunctive relief that it seeks would promote the public interest, and that the preliminary relief sought by Clear Channel would adversely affect the public interest.
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The MBTA determined that the public interest is best served by soliciting proposals for, awarding, and implementing a six-month license to use billboard structures on its property, because doing so is the best way for the MBTA to comply with its statutory mandate to maximize the revenues generated from outdoor advertising. The Court finds that this determination had a reasonable basis in fact, was neither arbitrary nor capricious, and does not appear to be the result of any unlawful action.
Such a determination by a government entity “that the public interest is better served” by the action that some other party seeks to enjoin “should not be second guessed by a court,” except where that other party can shows that the determination was the result of “illegal or arbitrary action.” Siemens Bldg. Technologies, Inc. v. Division of Capital Asset Management, 439 Mass. 759, 765 (2003) (affirming denial of injunction sought by disappointed bidder because injunction barring contract award would adversely affect the public interest).
Since Clear Channel “has not overcome the substantial public interest that would be adversely affected” if the MBTA’s request for a preliminary injunction were denied or Clear Channel’s motion were granted, the Court “need not address at length the likelihood of irreparable harm” to either party. Id. Indeed, as explained above, in a case like this the issuance of a preliminary injunction turns on the parties’ likelihood of success and what furthers the public interest, without considering claims of irreparable harm. See, e.g., Fordyce v. Town of Hanover, 457 Mass. 248, 255 n.10 (2010); LeClair v. Town of Norwell, 430 Mass. 328, 331-332 (1999).
5. Summary as to Appropriate Relief. For the reasons discussed above, the Court concludes in the exercise of its discretion that it will deny Clear Channel’s motion for a preliminary injunction but allow the preliminary relief sought by the MBTA. Cf. Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014) (“Trial judges have broad discretion to grant or deny injunctive relief.”).
Clear Channel is not entitled to a preliminary injunction because it is unlikely to succeed on the merits of its counterclaims. See Fordyce, 457 Mass. at 266-267 (vacating preliminary injunction because plaintiffs were “unlikely to succeed on the merits”).
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Conversely, the MBTA is likely to succeed on its claims and the limited relief it seeks by way of preliminary injunction would be in the public interest because it would allow the MBTA and Outfront Media to implement their new license agreement, including by seeking new permits to use the billboard structures on MBTA property for outdoor advertising.
Since the MBTA is likely to succeed on its claim that Clear Channel is obligated to transfer the billboard structures to the MBTA as of March 4, it makes sense to enjoin Clear Channel from dismantling, removing, disposing of, or interfering with any use of those structures.
At oral argument Clear Channel made clear that it does not oppose the other relief sought by the MBTA in its preliminary injunction motion, because it agrees that both the public interest and the interests of all parties are best served by Clear Channel keeping its current permits for using the disputed structures in place. If Clear Channel were ultimately to prevail on its counterclaims, it would all of its existing permits still to be in place. The Court concludes that it is in the public interest that Clear Channel be enjoined from doing anything to terminate or dispose of those permits, in part so that the MBTA and its new licensee will have a reasonable opportunity to seek new permits before the existing ones lapse or are revoked by the permitting authority.
The MBTA need not post any bond, since “[n]o such security shall be required … of a political subdivision of the Commonwealth.” Mass. R. Civ. P. 65(c).
ORDER
The motion for preliminary injunction filed by the Massachusetts Bay Transportation Authority is ALLOWED. The preliminary injunction motion filed by Clear Channel Outdoor, Inc., is DENIED.
February 23, 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court read more

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

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Massachusetts Bay Transportation Authority v. Clear Channel Outdoor, Inc. (Lawyers Weekly No. 09-006-18)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1884CV00268-BLS2
____________________
MASSACHUSETTS BAY TRANSPORTATION AUTHORITY
v.
CLEAR CHANNEL OUTDOOR, INC.
____________________
MEMORANDUM AND ORDER DENYING CLEAR CHANNEL’S MOTION FOR A TEMPORARY RESTRAINING ORDER
In 2003 the Massachusetts Bay Transportation Authority granted Clear Channel Outdoor, Inc., a 15-year license to operate billboards on MBTA property. That license will expire in early March 2018.1 The MBTA recently issued a request for responses by parties willing to enter into a six month license to operate the same billboards beginning after the Clear Channel license expires. The MBTA received bids from Outfront Media LLC, which agreed to enter into a six-month license, and Clear Channel, which refused to accept a term that short. The MBTA disqualified Clear Channel. It intends to award a six-month license to Outfront Media.
The MBTA brought this action. It seeks declarations that its recent request for responses is lawful, Clear Channel is not entitled to enforce a right of first refusal contained in its 2003 license, and neither of these disputes is subject to the arbitration clause in the 2003 license. It also seeks certain preliminary injunctive relief to enforce terms of the parties’ existing license. The parties agreed upon a schedule for the filing of cross-motions for a preliminary injunction, with a hearing on those motions now scheduled for February 22.
Clear Channel has filed an emergency motion seeking a temporary restraining order that would bar the MBTA from taking any steps to license its billboards to or contract with Outfront Media, or from “interfering in any way with Clear Channel’s rights in the billboards themselves or the permits necessary to operate those billboards.”
The Court will DENY this motion for a TRO because Clear Channel has not met its burden of showing that it is entitled to the requested relief. “A preliminary
1 The parties have submitted two different versions of their license. One states that it terminates on March 3, the other says March 5.
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injunction [or a TRO] is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To the contrary, “the significant remedy of a preliminary injunction should not be granted unless the plaintiffs [have] made a clear showing of entitlement thereto.” Student No. 9 v. Board of Educ., 440 Mass. 752, 762 (2004). Clear Channel has not yet made such a showing.
1. Clear Channel Has Asserted No Claims. Clear Channel’s request for injunctive relief is premature because Clear Channel has not asserted any counterclaims or any other kind of affirmative claim against the MBTA.
To obtain preliminary injunctive relief, “the applicant must show a likelihood of success on the merits of the underlying claim; actual or threatened irreparable harm in the absence of injunction; and a lesser degree of irreparable harm to the opposing party from the imposition of an injunction.” Wilson v. Commissioner of Transitional Assistance, 441 Mass. 846, 860 (2004). Since Clear Channel seeks to enjoin governmental action, the Court must also consider whether the requested injunctive relief will promote or at least not adversely affect the public interest. See Siemens Bldg. Technologies, Inc. v. Division of Capital Asset Management, 439 Mass. 759, 762 & 765 (2003) (affirming denial of injunction sought by disappointed bidder because injunction would adversely affect the public interest).
Thus, the filing of a meritorious claim or counterclaim is a condition precedent to seeking injunctive relief. See, e.g., Litton Industries, Inc. v. Colon, 587 F.2d 70, 74 (1st Cir. 1979) (injunction “must be based on a valid cause of action alleged in the complaint”); Goerlitz v. City of Maryville, 333 S.W.3d 450, 455 (Mo. 2011) (en banc) (“an injunction is a remedy and not a cause of action; therefore, it must be based on some recognized and pleaded legal theory”). “[A]ny motion or suit for either a preliminary or permanent injunction must be based upon a cause of action…. ‘There is no such thing as a suit for a traditional injunction in the abstract. For a traditional injunction to be even theoretically available, a plaintiff must be able to articulate a basis for relief that would withstand scrutiny under’ ” a motion to dismiss for failure to state a claim. Alabama v. U.S. Army Corps of Engineers, 424 F.3d 1118, 1127 (11th Cir. 2005), quoting Klay v. United Healthgroup, Inc. 376 F.3d 1092, 1097 (11th Cir.2004).
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The Court will not deny the TRO motion on this basis, however. Instead, it will assume that Clear Channel is prepared to assert counterclaims consistent with the legal theories outlined in its motion papers. In its memorandum, Clear Channel asserts two distinct theories under which it seeks relief against the MBTA. As explained below, neither theory supports the issuance of the requested TRO.
2. Claim that the MBTA Sought Commercially Unreasonable Terms. Clear Channel asserts that “the MBTA has violated its own contractual obligation to Clear Channel to afford it a right to bid on a solicitation that does not include terms that are commercially unreasonable or intended to defeat Clear Channel’s option,” meaning its right of first refusal.
Clear Channel has not demonstrated that such a claim is likely to succeed. And Clear Channel is not entitled to preliminary injunctive relief if it cannot prove that it is likely to succeed on the merits of its claims. See Fordyce v. Town of Hanover, 457 Mass. 248, 265 (2010) (vacating preliminary injunction on claim brought under public bidding statutes).
It seems unlikely that Clear Channel can prevail on a claim that it had some contractual right to have the opportunity to bid on a new billboard license on terms that Clear Channel considers to be commercially viable. To the contrary, the license agreement between Clear Channel and the MBTA specifies, in the same right-of-first-refusal provision upon which Clear Channel relies, that the MBTA could “publish a solicitation of bids” to license the billboards after Clear Channel’s contract expires “under such terms and conditions deemed to be in the best interests of the MBTA.” The only commercially reasonable interpretation of this unambiguous provision is that the MBTA retained the discretion to decide what terms and conditions for a new billboard license would be in its best interests. Clear Channel has no contractual right to dictate to the MBTA what license terms would be acceptable to Clear Channel, and then require the MBTA to grant a license on those terms. See generally Robert and Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016) (court must construe contracts in manner that gives them “effect as … rational business instrument[s] and in a manner which will carry out the intent of the parties”) (quoting Starr v. Fordham, 420 Mass. 178, 192 (1995)); Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002) (“If a
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contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.”); Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007) (“Whether a contract is ambiguous is also a question of law.”); Indus Partners, LLC v. Intelligroup, Inc., 77 Mass. App. Ct. 793, 795 (2010) (“ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other’s.”) (quoting Jefferson Ins. Co. v. Holyoke, 23 Mass. App. Ct. 472, 475 (1987)).
Clear Channel could not circumvent the provision quoted above by invoking the implied covenant of good faith and fair dealing, which “is implied in every contract.” See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014), quoting Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). 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. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 460 (2012) (affirming dismissal of claim), quoting Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 680 (2011). Instead, the implied covenant only governs “the manner in which existing contractual duties are performed.” Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 289 (2007).
Nor is Clear Channel likely to be able to prove that the MBTA crafted unreasonable terms in a deliberate effort to nullify Clear Channel’s right of first refusal, and thereby violated the implied covenant. Cf. Weiler, 469 Mass. at 82, (“The implied covenant provides ‘that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract….’ ”) (quoting Druker v. Roland Wm. Jutras Assocs., Inc., 370 Mass. 383, 385 (1976)).
It appears to be undisputed that Outfront Media is able to perform and is prepared to accept the terms proposed by the MBTA. Although Clear Channel insists that those terms are not commercially reasonable, Outfront Media apparently disagrees. Under these circumstances it will be hard for Clear Channel to establish that the MBTA’s request for responses was a charade, rather than a good faith effort to enter into a short, six-month lease of the billboards for reasons that make sense to
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the MBTA and Outfront even if they make no sense to Clear Channel. In any case, Clear Channel has not made any such showing yet.
3. Claim that Clear Channel has a Right of First Refusal. Clear Channel’s other legal theory is that the MBTA has breached the parties’ license agreement by refusing to give Clear Channel any chance to exercise its right of first refusal.
This claim cannot justify issuing a temporary restraining order because Clear Channel has not shown that it will suffer any irreparable harm if the TRO does not issue.2 As the moving party, Clear Channel has the “burden of showing it would suffer an irreparable harm absent an injunction.” GTE Products Corp. v. Stewart, 414 Mass. 721, 726 (1993). A party may not obtain preliminary injunctive relief without proving that it will suffer irreparable harm in the absence of such an order, and that such harm to the plaintiff from not granting the preliminary injunction would outweigh any irreparable harm that defendants or the public interest are likely to suffer if the injunction issues. See, e.g., American Grain Products Processing Institute v. Department of Pub. Health, 392 Mass. 309, 326-329 (1984) (vacating preliminary injunction on this ground); Nolan v. Police Comm’r of Boston, 383 Mass. 625, 630 (1981) (same).
The right-of-first-refusal provision in the parties’ existing license provides that: (1) before the MBTA awards any bid or accepts any proposal to license its billboards for a term beginning after the termination of Clear Channel’s license, the MBTA shall provide notice to Clear Channel “of all material terms and conditions offered by and such third person’s bid or proposal;” and (2) Clear Channel will then “have the right for a period of three calendar days to notify the MBTA that it accepts each and every term and condition offered by such third person.”
The current factual record suggests that the MBTA’s failure to give Clear Channel three days to exercise its right of first refusal will never cause Clear Channel
2 As a result the Court need not address the MBTA’s arguments or Clear Channel’s counterarguments regarding whether the right-of-first-refusal provision is void and unenforceable because it is against public policy as reflected in the Commonwealth’s public bidding statutes, or whether Clear Channel has forfeited any right of first refusal by failing to submit a responsive bid expressing a willingness to accept the terms and conditions proposed by the MBTA.
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any harm. That is Clear Channel has made clear that it is unwilling to accept all of the material terms that Outfront Media is prepared to accept. Clear Channel did so first in its own response to the MBTA’s request for responses. It reiterated the point in the declaration filed in support of its TRO motion. In all of these submissions Clear Channel has expressly stated that it refuses to enter into a six-month license, or to agree to other terms that the MBTA considers to be material. Clear Channel cannot show that it will be harmed if it never has the opportunity to exercise its right of first refusal without showing that Clear Channel is in fact willing to do so on the terms specified in its license. To date Clear Channel has not made such a showing.
Even assuming that Clear Channel may change its mind and agree to accept all the material terms agreed to be the winning bidder if given the opportunity to do so, however, Clear Channel is unlikely to suffer any irreparable harm if the Court denies the request for a TRO and waits to address the same issues in a few weeks on the parties cross-motions for a preliminary injunction and with the benefit of a more complete record.
The mere fact that the MBTA is moving forward execute a contract with Outfront Media and to make plans to transition its billboard license away from Clear Channel is unlikely to cause Clear Channel any irreparable harm in the next few weeks. If the Court is convinced at the preliminary injunction stage that any new license with Outfront Media is unlawful because the MBTA has breached its contractual obligation to give Clear Channel a right of first refusal, it can grant Clear Channel appropriate relief that will prevent any irreparable harm. The execution of a contract with Outfront Media, or work by Outfront Media to apply for billboard permits that would take effect after Clear Channel’s current license expires, would not interfere with any of Clear Channel’s existing rights in the billboards or its existing permits to operate those billboards. It appears to be undisputed that if Clear Channel’s existing license from the MBTA expires on the current termination date then Clear Channel’s existing permits will in effect be void.
The mere fact that Clear Channel finds itself in limbo, uncertain as to whether it will still be the MBTA’s billboard licensee after its current license expires, is not causing Clear Channel any irreparable harm. Clear Channel has known from the
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moment it entered into the current 15-year license that its rights under that agreement would terminate in early March 2018 and may not be renewed. Although the current license provides that the MBTA must give Clear Channel three days to exercise its right of first refusal, the MBTA could comply with that provision by triggering the refusal period four days before the current license expires. The mere fact that Clear Channel finds itself facing a period of uncertainty that was clearly contemplated in its existing license is not the sort of irreparable harm that would justify issuing the requested TRO.
Although Clear Channel also argues that it will suffer irreparable loss of good will and harm to existing customer relationships if it is unable to enter into a new billboard license with the MBTA, that claim is not relevant to the pending motion for a temporary restraining order. The parties have agreed upon a schedule for the briefing and hearing of cross-motions for a preliminary injunction that will give the Court some time before the current license expires to decide whether the MBTA should be allowed to transfer its billboard license from Clear Channel to Outfront Media. If the Court were to rule in Clear Channel’s favor, it could grant relief that would prevent this kind of alleged irreparable harm. As a result, Clear Channel will not suffer this kind of allegedly irreparable harm merely because it does not obtain a TRO. Cf. Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 617 n.11 (1980) (“Irreparable harm is absent if trial on the merits can be conducted before the injury occurs.”).
Finally, Clear Channel has not met its burden of showing that the proposed TRO would promote or at least would not be inconsistent with the public interest. If the MBTA is correct in its view that Clear Channel is not entitled to enforce its contractual right of first refusal, or if Clear Channel remains unwilling to accept all the material terms and conditions that the one successful bidder is prepared to accept, then the MBTA needs to be prepared to have its successor licensee in place and ready to manage the MBTA billboards. The requested TRO would prevent the MBTA from doing the planning and preparations needed effectively to manage this part of its physical plant.
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Since Clear Channel has not shown that it will suffer irreparable harm over the next few weeks if the MBTA continues to move forward with its plans to contract with Outfront Media, and the public interest may be harmed if the Court bars the MBTA from doing so, the Court will exercise its discretion to deny Clear Channel’s request for a TRO. Cf. Lightlab Imaging, Inc. v. Axsun Technologies, Inc., 469 Mass. 181, 194 (2014) (“Trial judges have broad discretion to grant or deny injunctive relief.”).
ORDER
Defendant’s motion for a temporary restraining order is DENIED.
January 31, 2018
___________________________
Kenneth W. Salinger
Justice of the Superior Court read more

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Posted by Massachusetts Legal Resources - February 2, 2018 at 1:04 pm

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Clairmont, et al. v. Amer Sports Winter & Outdoor Company, et al. (Lawyers Weekly No. 09-039-17)

1
COMMONWEALTH OF MASSACHUSETTS
PLYMOUTH, ss. SUPERIOR COURT
CIVIL ACTION
NO. 14-00505
FRANCIS CLAIRMONT AND GEORGE CLAIRMONT
vs.
AMER SPORTS WINTER & OUTDOOR COMPANY & another1
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT, AMER SPORTS WINTER & OUTDOOR COMPANY’S, MOTION FOR SUMMARY JUDGMENT
This action arises out of a January 15, 2011 incident in which the plaintiff, Francis Clairmont (“Clairmont’), tripped and fell while wearing a pair of boots manufactured by defendant Amer Sports Winter & Outdoor Company (“Amer Sports”). Clairmont’s Complaint against Amer Sports alleges negligence (Count I), defective design (Count II), breach of warranty (Count III), and failure to warn (Count IV) in connection her accident. Clairmont’s husband and co-plaintiff, George Clairmont, also asserts a claim for loss of consortium in the Complaint (Count IX).
This matter is before the Court on Amer Sports’ motion for summary judgment on all of the Plaintiffs’ claims. For the following reasons, Amer Sports’ motion is ALLOWED.
BACKGROUND
The following relevant facts are either undisputed or presented in the light most favorable to the non-moving party, in accordance with the dictates of Mass. R. Civ. P. 56.
On or about January 15, 2011, Plaintiff Francis Clairmont (“Francis”) was shopping at the Derby Street Shoppes in Hingham. She was wearing a pair of Solomon Gore-tex Contragrip
1 Eastern Mountain Sports, Inc.
2
ankle high hiking boots (“the Boots”) at the time. Amer Sports manufactured the Boots. The Boots have a “speed lacing” design, which includes a rigid J-shaped hook comprised of a curved neck and a fastening tail, through which the laces pass to tie each of the Boots. As Francis exited the store, the lace of the left boot caught on the hook of her right boot. She fell forward as her legs became entangled and was injured.
Plaintiffs present no expert testimony on the design of the speed laces, and have adduced no evidence that Amer Sports knew, or had reason to know, of any similar accidents or occurrences caused by the speed laces.
Amer Sports contends that manufacturers have used the patented speed lacing design for more than one-hundred years, and that this design is popular on hiking boots, work boots, and ice skates.
DISCUSSION
I. Standard of Review
Summary judgment is appropriate when the record shows that “there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Mass. R. Civ. P. 56(c); see also DuPont v. Commissioner of Corr., 448 Mass. 389, 397 (2007). The moving party bears the initial burden of demonstrating that there is no triable issue and he or she is entitled to judgment. Ng Bros. Constr., Inc. v. Cranney, 436 Mass. 638, 644 (2002), citing Pederson v. Time, Inc., 404 Mass. 14, 17 (1989); Kourouvacilis v. Gen. Motors Corp., 410 Mass. 706, 716 (1991). In reviewing a motion for summary judgment, the Court views the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in his or her favor. Jupin v. Kask, 447 Mass. 141, 143 (2006), citing Coveney v. President & Trs. of the Coll.
3
of the Holy Cross, 388 Mass. 16 (1983); see also Simplex Techs., Inc. v. Liberty Mut. Ins. Co., 429 Mass. 196, 197 (1999).
II. Negligence, Defective Design, and Breach of Warranty Claims (Counts I, II, and III)
While styled as three different theories of liability, Counts I, II, and III alleging negligence, defective design and breach of warranty, respectively, all turn on the same core contention that the speed laces on the Boots were defectively designed and that such defect caused plaintiff Francis’ accident.
To establish a claim for defective design, a plaintiff must show that the manufacturer “failed to exercise reasonable care to eliminate avoidable or foreseeable dangers to the user of the product.” Morrell v. Precise Engineering, Inc., 36 Mass. App. Ct. 935, 936 (1994) (Rule 1:28 Opinion), citing Uloth v. City Tank Corp., 376 Mass. 874, 880-881 (1978). A defective design claim requires proof that the product is not reasonably safe for its intended purposes and for reasonably foreseeable uses, considering the customer’s ordinary expectations about the product. See Back v. Wickes Corp., 375 Mass. 633, 640–641 (1978); see also Haglund v. Philip Morris, Inc., 446 Mass. 741, 748 (2006) (in design defect case, “jury must weigh multiple factors, including ‘the gravity of the danger posed by the challenged design, the likelihood that such danger would occur, the mechanical feasibility of a safer alternative design, the financial cost of an improved design, and the adverse consequences to the product and to the consumer that would result from an alternative design.’”) (citations omitted). Further, “[i]n claims alleging negligence in the design of a product, as with claims of a design defect in breach of the implied warranty of merchantability, the plaintiff must show an available design modification which would reduce the risk without undue cost or interference with the performance of the [product], and the jury must consider whether a safer alternative design was available in deciding whether
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the defendant was negligent for failing to adopt that design. … a reasonable alternative design must be shown before a defendant may be found liable for breach of the implied warranty of merchantability based on a design defect, and [a] defendant cannot be found to have been negligent without having breached the warranty of merchantability.” Evans v. Lorillard Tobacco Co., 465 Mass. 411, 443-444 (2013) (citations, internal punctuation omitted).
In this case, Plaintiffs present no expert testimony on whether the design of the speed laces was defective or whether there was an available appropriate design modification that would have reduced such risk without undue cost or interference with the product’s performance. Plaintiffs contend they do not need an expert; Amer Sports argues that they do. The parties appear to agree, however, that the requirement of expert testimony poses a purely legal question for the Court to resolve. Expert testimony is generally required where an issue the jury must decide “is beyond the common knowledge or understanding of the lay juror.” Commonwealth v. Sands, 424 Mass. 184, 186 (1997). Accordingly, Massachusetts courts have routinely held that expert testimony in design defect cases is required. See, e.g., Enrich v. Windmere Corp., 416 Mass. 83, 87 (1993) (alleged defect in an electric cooling fan required expert testimony); Morrell, 36 Mass. App. Ct. at 936 (determination of proper scaffolding brackets required expert testimony); Wiska v. St. Stanislaus Social Club, Inc., 7 Mass. App. Ct. 813, 821 (1979) (alleged defective design of an automobile’s windshield required expert testimony). It is only in rare cases, where the jurors can simply apply their own lay knowledge to determine liability because the “design defect claimed is so simple or obvious that the need for technical assistance is eliminated,” that such expert testimony is unnecessary. Esturban v. Massachusetts Bay Transp. Auth., 68 Mass. App. Ct. 911, 912 n. 7 (2007); Smith v. Ariens Co., 375 Mass. 620, 625 (1978) (a jury could infer without expert testimony that metal protrusions on the handlebars of a
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snowmobile, which cut the plaintiff’s face when she was propelled forward in a collision, amounted to an obvious design defect); doCanto v. Ametek, 367 Mass. 776, 782 (1975) (no expert testimony needed where plaintiff introduced the defendant’s subsequent remedial measures to the machine that caused the injury and the opinion of the designer of the machine that the product was unsafe).2
While the speed laces in this case are of a simple design, and the facts of the accident are straightforward, the analysis of the alleged design defect in the speed laces is neither simple nor straightforward. The jury would have to consider the biomechanics of a person walking in the Boots, the design and location of the speed laces on the Boots, and the appropriateness of an alternative design, all issues which are not sufficiently obvious that they are within the average juror’s common knowledge. See Esturban, 68 Mass. App. Ct. at 912 (“Without the aid of an expert in the field, jurors would also be left to speculate about whether alternatively engineered designs might have prevented the accident”) (citation omitted). This Court thus finds expert testimony is required in this case to prove a design defect in the Boots, and that speed laces – which haves been widely used in a variety of footwear for a century – do not present a gross or obvious defect.
Moreover, aside from Plaintiffs’ post-accident claim that the Boots posed an obvious trip hazard, Plaintiffs failed to elicit any evidence concerning similar incidents related to the speed lacing design or that Amer was aware of any such risks associated with the speed laces.
2 The rule is similar in professional negligence cases. In them, a plaintiff can prove professional negligence without an expert “[o]nly where professional negligence is so gross or obvious that jurors can rely on their common knowledge to recognize or infer negligence.” Herbert A. Sullivan, Inc. v. Utica Mut. Ins. Co., 439 Mass. 387, 403 (2003). Examples of such “gross or obvious” malpractice in the professional context includes a failure to meet deadlines, lack of compliance with client’s instructions, and unexcused failures to defend a client, particularly when such actions are compounded by misrepresentations and false statements to the client. See, e.g. Global Naps, Inc. v. Awiszus, 457 Mass. 489, 501 (2010); Wagerman v. Adams, 829 F.2d 196, 218-220 (1st Cir. 1987); Glidden v. Terranova, 12 Mass. App. Ct. 597, 598-601 (1981).
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Plaintiffs thus therefore failed to demonstrate that the speed laces on the Boots created a reasonably foreseeable risk of accident. Two other courts have come to similar conclusions. In a case addressing a similar claim involving shoes with a speed lacing design, the United States District Court for the Southern District of Ohio granted summary judgment against the plaintiff’s claim, finding that the plaintiff had “fail[ed] to raise genuine issues of material fact regarding the breach of duty, foreseeability, and causation elements of his negligence claim related to speed-lace hooks. Plaintiff did not demonstrate how a reasonable jury could find that Defendant was on actual or constructive notice of the alleged danger of speed-lace hooks nor did Plaintiff show that an accident from the use of speed-lace hooks was reasonably foreseeable.” Barger v. CSX Transp., Inc., 110 F. Supp. 2d 648, 653-654 (S.D. Ohio 2000). Similarly, the First Circuit affirmed a grant of summary judgment in a similar case to a manufacturer of resin sandals, called “Crocs,” in part because the plaintiff “failed to put forward an expert to accredit” a government report on potential dangers of the product. Geshke v. Crocs, Inc., 740 F.3d 74, 79 (1st Cir. 2014).
Plaintiffs failed to adduce evidence, expert or factual, to support their contention that the Boots posed an obvious design defect or that a reasonable alternative design was available. Amer Sports is thus entitled to judgment as to Counts I, II, and III of the Complaint.
III. Failure to Warn (Count IV)
Count IV of the Complaint alleges Amer Sports had a duty to warn Plaintiff Francis Clairmont that the Boots posed a tripping hazard.
A manufacturer has a duty to warn against a foreseeable use of its product involving a hazard not apparent to the user. Fegan v. Lynn Ladder Co., Inc., 3 Mass. App. Ct. 60, 63-64 (1975). However, a manufacturer has no duty to warn of “risks that were not reasonably foreseeable at the time of sale or could not have been discovered by way of reasonable testing
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prior to marketing the product.” Vassallo v. Baxter Healthcare Corp., 428 Mass. 1, 23 (1998). “A warning is not required unless ‘the person on whom the duty rests has some reason to suppose a warning is needed.’” Killeen v. Harmon Grain Prod., Inc., 11 Mass. App. Ct. 20, 24 (1980) (quoting Carney v. Bereault, 348 Mass. 502, 506 (1965)). Further, “where the danger presented by a given product is obvious, no duty to warn [exists] because a warning will not reduce the likelihood of injury.” Bavuso v. Caterpillar Indus., Inc., 408 Mass. 694, 699 (1990), quoted in Evans, 465 Mass. at 439.
Francis’ argument that the speed laces were obviously defectively designed undermines her failure to warn claim. Even leaving that aside, Francis failed to establish that the speed laces posed a reasonably foreseeable risk or that such risk could have been discovered through additional product testing. Accordingly, based upon the facts before this Court, Amer Sports had no reason to believe a warning was required and is entitled to summary judgment as to Count IV of the Complaint.
IV. Loss of Consortium (Count IX)
Recovery for loss of consortium generally requires proof of a tortious act which caused injury to one’s spouse. Sena v. Commonwealth, 417 Mass. 250, 264 (1994) (citations omitted); Mouradian v. General Elec., 23 Mass. App. Ct. 538, 544 (1987) (citations omitted). As discussed above, as the substantive counts brought by Francis against Amer Sports must be dismissed, the claims of her husband, George, for loss of consortium arising from Francis’ claims must also be dismissed. Short v. Town of Burlington, 11 Mass. App. Ct. 909, 910 (1981) (claim of wife for loss of consortium failed as entirely derivative of failed personal injury claim by husband). Amer Sports is therefore entitled to summary judgment on Count IX.
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ORDER
For the foregoing reasons, Amer Sports Winter & Outdoor Company’s motion for summary judgment on Counts I-IV and IX is ALLOWED.
______________________________
Michael D. Ricciuti
Justice of the Superior Court
DATED: October 30, 2017 read more

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Posted by Massachusetts Legal Resources - November 13, 2017 at 9:29 pm

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Outdoor Latin Series Comes to South End

[photo]

What's better than a free Latin concert? A free outdoors Latin concert right here in the South End. 

Taking place on three Thursdays in July and August at outdoor locations across the South End will be three concerts from the Tito Puente Latin
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Posted by Massachusetts Legal Resources - July 6, 2013 at 10:13 am

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Drive-Ins and Outdoor Films Around Boston

[photo]

Planning to catch up on movies this summer? Whether you're relaxing in an air-conditioned theater, watching an outdoor summer movie series in the park, or going the old-fashioned route and pulling up at a drive-in — here's a list of free outdoor
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Posted by Massachusetts Legal Resources - July 3, 2013 at 8:22 pm

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South End Restaurants with Outdoor Seating

The cat patio is already a hit with diners at Tres Gatos.

Not sure where you can get a drink or a meal outside in the South End? The Boston Business Journal made the decision-making process delightfully easy for you.

The BBJ released an interactive data map with the location of (almost) every bar in the Greater Boston area that has outdoor patio seating.

On Tremont Street, there’s a huge patio with seating for The Beehive and Hamersly’s Bistro, both top notch dinner spots with the Beehive also carrying a lovely cocktail menu. Further down Tremont is Tremont 647 and Parish Cafe. On Washington Street there’s Toro for small plates and Stella for Italian, and in SoWa, there’s Gaslight and a newly opened patio at Cinquecento

Where do you go to have a drink or a meal outdoors in the South End? Tell us in the comments.

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Posted by Massachusetts Legal Resources - May 18, 2013 at 11:02 am

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