Posts tagged "Weekly"

The Hanover Insurance Group, Inc. v. Raw Seafoods, Inc. (Lawyers Weekly No. 11-048-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.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-1554                                       Appeals Court

THE HANOVER INSURANCE GROUP, INC.  vs.  RAW SEAFOODS, INC.

No. 15-P-1554.

Suffolk.     September 16, 2016. – April 26, 2017.

Present:  Agnes, Neyman, & Henry, JJ.

Insurance, General liability insurance, Coverage.  Words, “Occurrence.”

Civil action commenced in the Superior Court Department on September 21, 2012.

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

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Posted by Stephen Sandberg - April 27, 2017 at 11:41 pm

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

Liberty Mutual Insurance Co. v. Peoples Best Care Chiropractic and Rehabilitation, Inc., et al. (Lawyers Weekly No. 12-047-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV01239-BLS2
____________________
LIBERTY MUTUAL INS. CO.
v.
PEOPLES BEST CARE CHIROPRACTIC AND REHABILITATION, INC.; PLEASANT VALLEY CHIROPRACTIC LLC; and RAGHUBINDER BAJWA, M.D., P.C.
____________________
MEMORANDUM AND ORDER ALLOWING PLAINTIFF’S
MOTION FOR SUMMARY JUDGMENT
This lawsuit concerns the rates that Liberty Mutual Insurance Company pays to chiropractic clinics under Personal Injury Protection (“PIP”) benefit provisions in personal automobile insurance policies. Liberty seeks a declaration that an Illinois court’s final judgment that approved the settlement of a nationwide class action regarding these rates is entitled to full faith and credit in Massachusetts and binds the three Defendants, who did not opt out of the Illinois proceeding and therefore are members of the plaintiff class in that case. Defendant Raghubinder Bajwa, M.D., P.C., was defaulted for failing to answer the complaint. Defendants Peoples Best Chiropractic and Rehabilitation, Inc. (“PBC”) and Pleasant Valley Chiropractic LLC (“PVC”) (collectively, the remaining “Defendants”) oppose Liberty’s request and assert counterclaims seeking to bar Liberty from implementing the settlement.
The Court concludes that Liberty is entitled to summary judgment in its favor on all claims. With respect to Liberty’s affirmative claim, the Court concludes that there is an actual controversy between the parties and that the Illinois final order and judgment is entitled to full faith and credit in Massachusetts courts. In addition, Liberty is entitled to judgment as a matter of law on Defendants’ counterclaims. Defendants sought leave to conduct certain discovery before the Court decided Liberty’s summary judgment motion. The Court denies this request because none of the discovery sought by Defendants concerns any factual issue relevant to whether Liberty is entitled to summary judgment.
1. Factual Background. Liberty was the defendant in a multi-state class action filed in Illinois state court to challenge the way Liberty determines what rates it will pay to chiropractors and other medical care providers under the no-fault PIP
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provisions of personal automobile insurance policies. The Illinois case was captioned Leonon Chiropractic Clinic, P.C. v. Liberty Mutual Insurance Company and docketed as Illinois Circuit Court for St. Clair County, no. 14-L-52.
Liberty compares billed charges for medical treatment to a database of charges that Liberty believes are for similar services provided in the same geographic area. Since 2011 Liberty has done so using data maintained by a non-profit company called FAIR Health, Inc. Liberty generally refuses to pay rates any higher than the 80th percentile of similar charges according to the FAIR Health data. The plaintiffs in the Illinois case claimed that this practice was unlawful.
The parties to the Illinois lawsuit entered into a Stipulation of Settlement in October 2014 that would resolve all claims on behalf of a proposed class. The “settlement class” included subclasses of policyholders, claimants, and medical providers in thirty-eight states, including Massachusetts. The provider subclass consisted of medical care providers that provided PIP-covered treatment from June 25, 2008, through October 31, 2014, and had their requests for reimbursement reduced by Liberty as a result of its use of a computerized database.
The essence of the proposed settlement was that the parties agreed to the method that Liberty would use to determine the reasonableness of charges for covered treatment during the five years after October 31, 2014. The settlement agreement provided that, if the class were certified and the settlement were approved, then the class members would stipulate that Liberty’s determination of the reasonableness of charges for future claims during this five-year period using the agreed-upon method would be lawful, release all claims arising from payments by Liberty made on or before October 31, 2014, and agree not to sue Liberty to contest its determination of the reasonableness of future charges using the agreed-upon method.
After the Illinois court preliminarily approved the settlement, a court-approved notice was sent to each potential class member, including PBC and PVC. This notice was sent to Defendants at the same addresses they used when billing Liberty; it is undisputed that the notice was sent to the correct addresses. Defendants had the opportunity to opt out of the proposed class, but they did not do so.
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At the final settlement hearing, Attorney Brian McNiff (who now represents PBV and PVC in this case) objected to the settlement on the grounds that it was unfair to Massachusetts class members. The Illinois court overruled all objections, certified the proposed class, and approved the settlement in February 2015. That decision was affirmed on appeal in February 2016.
2. Actual Controversy. There is an actual controversy between the parties regarding the enforceability of the Illinois final order that can be resolved by declaring the rights of the parties in accord with G.L. c. 231A.
Since the Illinois class action settlement was approved in February 2015, Defendants have brought more than thirty lawsuits against Liberty in Massachusetts district courts in which Defendants have challenged Liberty’s payment of less than the full face amount of a PIP charge. Liberty contends that such claims are barred by the covenant not to sue in the Illinois class action settlement, and that the final order by the Illinois court is enforceable in Massachusetts under the Full Faith and Credit clause of the United States Constitution. Defendants contend that the final order approving the Illinois class action settlement is not enforceable in Massachusetts and that they are not bound by it.
The fact that Defendants have no pending lawsuits against Liberty does not put an end to the actual controversy regarding whether the Illinois final order is valid and enforceable against Massachusetts class members like the Defendants. Cf. St. George Greek Orthodox Cathedral of Western Mass., Inc. v. Fire Dept. of Springfield, 462 Mass. 120, 124 (2012) (actual controversy existed as to validity of city ordinance regarding automatic fire alarm systems, even if city had not commenced any enforcement action against plaintiff).
Defendants are continuing to provide chiropractic services and thus are quite likely to continue seeking reimbursement from Liberty under PIP benefits provided to Massachusetts drivers. It is evident that Defendants will continue to dispute whether Liberty is entitled to determine the reasonableness of Defendants’ charges using the method that Defendants and all other class members stipulated to in the Illinois proceeding. Indeed, Defendants own counterclaims in this action—in which they claim that Liberty violates Massachusetts law if it complies with the terms of
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the Illinois final order—confirm that there remains a live, actual controversy between the parties.
3. Full Faith and Credit. The undisputed facts show that the Illinois final order and judgment is entitled to full faith and credit in Massachusetts courts and that Defendants, as members of the plaintiff class in the Illinois proceeding, are bound by that order and by the covenant not to sue Liberty.1
“[T]he full faith and credit clause of the United States Constitution, art. IV, § 1, requires Massachusetts courts to recognize a final judgment obtained in another State as long as the judgment-rendering State possessed personal jurisdiction over the parties and jurisdiction over the subject matter of the action in which the judgment was rendered.” Bishins v. Richard B. Mateer, P.A., 61 Mass. App. Ct. 423, 428 (2004). “The Constitution’s Full Faith and Credit Clause is implemented by the Federal Full Faith and Credit Statute, 28 U.S.C. § 1738.” Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 80 (1984). Under that statute, “a judgment entered in a class action, like any other judgment entered in a state judicial proceeding, is presumptively entitled to full faith and credit” in every other court in the United States. Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 374 (1996).
3.1. Due Process and Personal Jurisdiction. Defendants’ assertion that it would violate due process for them to be bound by the Illinois final order is without merit. A state court may bind an absent plaintiff in a class action “even if he or she lacks minimum contacts with the forum, so long as basic due process protections are provided.” Moelis v. Berkshire Life Ins. Co., 451 Mass. 483, 486-487 (2008). Due process is satisfied so long as members of a plaintiff class are given notice of the proceeding, an opportunity to opt out of the class, and “an opportunity to be heard and participate in the litigation, whether in person or through counsel.” Philips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985).
1 At oral argument Liberty waived the portion of its prayer for relief seeking a declaration that the Illinois final order enjoins Defendants from bringing lawsuits in Massachusetts or elsewhere. It is not at all clear that “a state-court injunction barring a party from maintaining litigation in another State” must be enforced under the Full Faith and Credit Clause. See Baker v. General Motors Corp., 522 U.S. 222, 235-236 & n.9 (1998). But, as Liberty recognized by waiving this prayer for relief, the Court can resolve the current controversy between the parties without reaching that issue.
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The record shows, and the Illinois appellate court found, that all of these due process requirements were satisfied in this case. Both Defendants were given notice of the lawsuit and of the proposed class action settlement. Defendants were told they could opt out of the class, and took no action to do so. They were represented by class counsel. The Illinois court expressly found that the class members received adequate representation. And Defendants had the opportunity to lodge an objection to the proposed settlement, by themselves or through counsel of their choice. Nothing more was required to satisfy due process.
Defendants received adequate notice of the class action. Service of the notice by first class mail to Defendants’ correct address was sufficient because it was “reasonably calculated” to inform Defendants of the pending class action and proposed settlement, and of their opportunity to raise objections. Town of Andover v. State Financial Svcs., Inc., 432 Mass. 571, 574-575 (2000), quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); accord Phillips Petroleum, 472 U.S. at 812-814 (notice to members of putative class of plaintiffs by first class mail with opportunity to opt out satisfies due process). Liberty is not required to present direct evidence that Defendants in fact received the notice. Id.
Defendants’ complaint that the Illinois court nullified certain opt-out requests by Massachusetts medical providers and their assertion that the court barred Defendants from seeking legal advice from their own lawyers mischaracterizes what actually happened in the Illinois proceeding. In its final order and judgment, the Illinois found that three Massachusetts law firms, including the firm that now represents Defendants in this action, had sent “materially false and misleading” descriptions of the proposed class action settlement to medical providers in Massachusetts. As a remedy, the court invalidated the roughly 500 opt-out notices that had been submitted by Massachusetts providers and ordered that those providers be provided with a curative notice regarding the proposed settlement and given additional time to decide whether they still wished to opt out. Roughly 300 providers who received the curative notice again opted out. None of that affected Defendants, because they had never opted out in the first place. The Illinois court also barred the lawyers from reiterating the substance of any of the particular
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statements that the court specifically found to be false or misleading. Nothing in the Illinois order barred Defendants from speaking with their attorneys, however. Defendants’ assertion that their lawyers were subject to a complete gag order and not allowed to speak with their clients is incorrect.
3.2. Consistency with Massachusetts Law. Defendants’ assertion that the Illinois judgment violates Massachusetts law and therefore is not entitled to full faith and credit in Massachusetts is also without merit.
First, the Illinois settlement does not rewrite the standard Massachusetts Automobile Insurance Policy and thus did not have to be approved by the Massachusetts Commissioner of Insurance. The standard policy provides that PIP benefits include payment of “all reasonable expenses incurred as a result of the accident for necessary medical, surgical, x-ray and dental services.” This coverage is mandated by statute. See G.L. c. 90, § 34A (definition of “personal injury protection”) and § 34M (mandating PIP benefits). An insurer providing PIP benefits is not required to pay whatever amount a medical provider chooses to bill; only reasonable expenses need be paid. Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60, 64 (1999); accord Boston Medical Ctr. Corp. v. Secretary of Exec. Office of Health and Human Svcs., 463 Mass. 447, 456-457 (2012) (statute requiring Medicaid program to reimburse hospitals’ “reasonable” costs does not mandate reimbursement of actual but unreasonable costs).
Nothing in the settlement agreement approved in the Illinois judgment modifies Liberty’s obligation under the standard policy to pay “reasonable expenses.” To the contrary, the approved settlement merely reflects an agreement as to how Liberty may go about determining whether payment requests by medical providers are reasonable or not. Nothing in the standard policy or the underlying statute bars an auto insurer and a single medical provider from reaching agreement as to what range of rates both sides consider to be reasonable for purposes of paying PIP benefits. The mere fact that the Illinois judgment resolved a class action, rather than a dispute with a single medical provider, is immaterial.
Second, the stipulation of settlement approved by the Illinois court does not appear to violate G.L. c. 176D, § 3A. The settlement provides that Liberty may
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determine what constitutes a reasonable charge for a covered treatment using any of several different methods, including by paying “the amount authorized by a written PPN or PPO agreement to which the Medical Provider is a party.” The Court agrees with Defendants that, if this provision allowed Liberty to take advantage of low rates that some preferred provider network or organization had negotiated with some insurer other than Liberty, then it would violate § 3A. In relevant part, that statute bars insurers from setting “the price to be paid to any health care facility or provider by reference to the price paid, or the average of prices paid, to that health care facility or provider under a contract or contracts with any other nonprofit hospital service corporation, medical service corporation, insurance company, health maintenance organization or preferred provider arrangement. G.L. c. 176D, § 3A, clause (iii). But the Court construes this provision only as allowing Liberty to hold a medical provider to rates set in a contract between Liberty and a PPN or PPO in which the medical provider is a member. Construed in this manner, the provision does not violate § 3A.
4. Disposition of Counterclaims. The rulings above also dispose of Defendants’ three counterclaims.
In Count I, Defendants claim that the Illinois settlement violates G.L. c. 176D, § 3A, because it allows Liberty to force medical providers to accept payment based on prices paid under contracts with insurers other than Liberty. As explained above, the Court construes the disputed settlement provision only as allowing Liberty to hold medical providers to rates established in contracts to which Liberty is a party. This claim therefore fails as a matter of law.
In Count II, Defendants claim that the Illinois settlement has the effect of rewriting the standard Massachusetts Automobile Insurance Policy and therefore, under G.L. c. 175, § 113A, cannot take effect in Massachusetts unless and until it is reviewed and approved by the Commissioner of Insurance. As discussed above, Defendants mischaracterize the Illinois settlement. The agreement approved by the Illinois court regarding what rates are reasonable does not rewrite the standard policy provision requiring that as part of any PIP benefits Liberty must pay reasonable medical expenses. This claim also fails as a matter of law.
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Finally, in Count III Defendants allege that Liberty violated the Illinois final order “by asserting that it is the provider whose participation in the Class Settlement controls the payment of future benefits.” The Illinois class action was brought on behalf of medical providers. The settlement approved by the Illinois court was a settlement in which Liberty and all participating medical providers (including Defendants) agreed what payment levels would be deemed “reasonable” under PIP benefit provisions in automobile policies. The settlement class approved by the Illinois court included a policyholder subclass, a claimant subclass, and a provider subclass. All members of the provider subclass, including Defendants, are bound by the settlement agreement. Liberty has not violated the Illinois court’s order by accurately explaining what that order provided. This claim also has no merit as a matter of law.
ORDER
Plaintiff’s motion for summary judgment is ALLOWED. Final judgment shall enter dismissing Defendants’ counterclaims with prejudice and also declaring that: (1) the Final Order and Judgment entered in Lebanon Chiropractic LLC v. Liberty Mutual Ins. Co., Illinois Circuit Court for St. Clair County, civil action no. 14-L-521, is entitled to full faith and credit in the courts of the Commonwealth of Massachusetts; and (2) Defendants Peoples Best Care Chiropractic and Rehabilitation, Inc., Pleasant Valley Chiropractic LLC, and Raghubinder Bajwa, M.D., P.C., are bound by the terms of the Lebanon Chiropractic Final Order and Judgment.
April 7, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 8:06 pm

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In re ReWalk Robotics Ltd. Stockholder Litigation (Lawyers Weekly No. 12-048-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV03336-BLS2
1684CV03670-BLS2
____________________
IN RE REWALK ROBOTICS LITD. STOCKHOLDER LITIGATION
____________________
MEMORANDUM AND ORDER DENYING DEFENDANTS’ MOTION TO STAY PENDING PARALLEL FEDERAL PROCEEDINGS
The named plaintiffs in these putative class actions claim that ReWalk Robotics Ltd. and thirteen other defendants are liable under §§ 11, 12(a)(2), and 15 of the federal Securities Act because ReWalk purportedly made false statements in a registration statement and prospectus concerning a public offering of securities. The first of these actions was filed on October 31, 2016. The second was filed on November 30, 2016. They were consolidated on January 9, 2017.
A similar lawsuit making similar Securities Act claims against the same Defendants was filed in the United States District Court for the District of Massachusetts on January 31, 2017. That lawsuit was docketed as Deng v. ReWalk Robotics et al., no. 1:17-cv-10179-FDS, and is pending before Judge Saylor.
Defendants have moved to stay these state court proceedings pending dispositive resolution of this federal lawsuit.1 A trial judge has broad discretion to grant or deny a stay of proceedings pending resolution of the same or similar claims in another forum. Travenol Laboratories, Inc. v. Zotal, Ltd., 394 Mass. 95, 97 (1985). The Court concludes, in the exercise of its discretion, that there is no good reason to stay these actions. It will therefore DENY Defendants’ motion.
1 When Defendants filed their motion to stay, they represented that a second federal class action asserting similar claims had been filed against them in the United States District Court for the Northern District of California, and that Defendants have moved to have the two federal actions consolidated in the District of Massachusetts as a single multidistrict litigation proceeding. In their reply memorandum, however, Defendants report that the California action was voluntarily dismissed on March 23, 2017. As a result, there are currently only two sets of actions asserting similar Securities Act claims against ReWalk and the other Defendants: these two actions in Massachusetts Superior Court and the Deng case filed several months later in federal court in the District of Massachusetts.
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Although Defendants argue that it would be inefficient for these cases and the pending federal action to proceed at the same time, they do not muster any convincing explanation as to why they seek a stay of these actions in Massachusetts court rather than asking the federal judge to stay the later-filed federal action.
The first of these consolidated actions was filed in the Massachusetts Superior Court three months before the pending federal action was filed. Furthermore, the additional factual allegations asserted in the consolidated complaint in these actions suggest that the state court plaintiffs have made more progress in investigating the factual basis for their claims. There is no evidence that the plaintiffs in the federal action have done anything of substance to move their case forward. As a result, and in the absence of any other reason to defer to the federal court, the fact that these actions were filed first weighs heavily against staying these actions. See, e.g., C.D.S., Inc. v. Zetler, 198 F.Supp.3d 323, 332 (S.D.N.Y. 2016). Defendants argue that the federal action should be treated as if it were the first-filed case because those plaintiffs originally asserted the same claims against the same Defendants in an action filed in California state court on September 20, 2016, a month before the first action was filed in Massachusetts. But the California action was dismissed because the California state courts lacked personal jurisdiction over the Defendants. If a judgment had been entered in the California action it would have violated the constitutional requirements of due process and thus been a “nullity.”2 Since the California action was a nullity, it can hardly count as being the first filed action.
The fact that Plaintiffs in these actions are asserted claims under the federal Securities Act has no bearing on whether this action should be stayed until the later-filed federal action is resolved. State and federal courts have concurrent subject
2 “[A] judgment rendered in the absence of personal jurisdiction is a nullity.” Vazquez-Robles v. CommoLoCo, Inc., 757 F.3d 1, 4 (1st Cir. 2014); accord World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292 (1980) (judgment entered by state court with no personal jurisdiction over defendant violates Fourteenth Amendment due process clause and therefore is void); Lamarche v. Lussier, 65 Mass. App. Ct. 887, 889 (2006) (“A judgment is void if the court from which it issues lacked jurisdiction over the defendant.”); see also Securities and Exchange Comm’n v. Ross, 504 F.3d 1130 (9th Cir. 2007) (vacating disgorgement order entered in Securities Act case because district court lacked personal jurisdiction over defendant).
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matter jurisdiction over Securities Act claims. See Fortunato v. Akebia Therapeutics, Inc., 1584CV02665-BLS2, slip op. at 2-16, 2017 WL 716356, *1-*9 (Mass. Sup. Ct. Feb. 21, 2017) (Salinger, J.). As a result, Plaintiffs in these actions are entitled to choose to proceed in State court.
Plaintiffs’ choice of forum should not be disregarded merely because they are asserting federal claims. “State courts are adequate forums for the vindication of federal rights;” this is “a foundational principle of our federal system.” Burt v. Titlow, 134 S. Ct. 10, 15 (2013). The Supreme Court has “consistently held that state courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising under the laws of the United States.” Id., quoting Tafflin v. Levitt, 493 U.S. 455, 458 (1990). Defendants’ arguments to the contrary are without merit.
Defendants have not suggested that they would be unfairly prejudiced by having to litigate in Massachusetts and thus have not moved to dismiss under the doctrine of forum non conveniens. To the contrary, Defendants’s preferred forum is in Massachusetts, albeit in federal rather than state court.
In sum, Defendants have not shown there is any good reason to stay these actions.
ORDER
Defendants’ motion to stay these consolidated case pending resolution of a parallel civil action in federal court is DENIED.
April 3, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 4:32 pm

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The Gillette Company v. Provost, et al. (Lawyers Weekly No 12-040-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1584CV00149-BLS2
____________________
THE GILLETTE COMPANY
v.
CRAIG PROVOST, JOHN GRIFFIN, WILLIAM TUCKER, DOUGLAS KOHRING, and SHAVELOGIC, INC.
____________________
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
The Gillette Company alleges that four former employees helped ShaveLogic, Inc., develop a new disposable cartridge shaving razor using Gillette’s confidential information. Gillette claims that in so doing Defendants violated G.L. c. 93A, the individual defendants breached non-disclosure agreements with Gillette, and all five Defendants engaged in a civil conspiracy. It also claims that ShaveLogic’s patents and patent applications should be subjected to a constructive trust in favor of Gillette. Gillette does not claim that any of the individual defendants breached a covenant not to compete with Gillette. The parties previously stipulated to the dismissal with prejudice of Gillette’s trade secret claims.1
ShaveLogic claims, in turn, that Gillette intentionally interfered with prospective business relations and violated c. 93A, by threatening to bring and then filing baseless legal claims in an attempt to keep ShaveLogic from entering the market for so-called wet-shaving products.
The parties have filed cross-motions for summary judgment on all remaining claims and counterclaims. The Court concludes that Defendants are entitled to summary judgment in their favor on Gillette’s remaining claims because Gillette cannot prove that Defendants misused any of Gillette’s confidential information or that the individual defendants breached any non-disclosure agreement. The Court
1 The Court (Salinger, J.) previously ordered the dismissal with prejudice of Gillette’s claims against three other defendants. It dismissed Gillette’s claims that ShaveLogic’s general counsel breached fiduciary duties that he owed as a former Gillette patent counsel and that ShaveLogic’s CEO, its president, and the other individual defendants aided and abetted that alleged breach of fiduciary duty and conspired to bring it about.
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also concludes that Gillette is not entitled to summary judgment on ShaveLogic’s counterclaims because a reasonable fact finder could conclude that Gillette had deliberately brought baseless claims in an attempt to bully ShaveLogic out of the market. The Court will schedule a final pre-trial conference to discuss trial of ShaveLogic’s counterclaims.
1. Gillette’s Claims. Defendants are entitled to summary judgment in their favor on Gillette’s remaining claims because the undisputed material facts show that Gillette has “no reasonable expectation of proving” at least one element of each of its claims. See Boazava v. Safety Ins. Co., 462 Mass. 346, 350 (2012). “A nonmoving party’s failure to establish an essential element of her claim ‘renders all other facts immaterial’ and mandates summary judgment in favor of the moving party.” Roman v. Trustees of Tufts College, 461 Mass. 707, 711 (2012), quoting Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711 (1991).
1.1. Unfair Competition—G.L. c. 93A. In Counts III and VIII of its amended complaint, Gillette claims that the remaining Defendants used confidential information belonging to Gillette to design competing products that ShaveLogic has patented or is seeking to patent, and that this constitutes an unfair trade practice in violation of G.L. c. 93A. The intentional misappropriation and use of trade secrets to compete against the owner of that confidential information can violate c. 93A. See Jillian’s Billiard Club of America, Inc. v. Beloff Billiards, Inc., 35 Mass. App. Ct. 372, 373-375 & 377 (1993).
Since Gillette has been unable to muster any evidence that Defendants used Gillette’s confidential information to develop razors for ShaveLogic, Defendants are entitled to summary judgment on these claims. See Kourouvacilis, supra, at 715 (“If the nonmoving party cannot muster sufficient evidence to make out its claim, a trial would be useless and the moving party is entitled to summary judgment as a matter of law.” (quoting Celotex Corp. v. Catret, 477 U.S. 317, 328 (1986) (White, J., concurring)).
1.1.1. Using Well Known Concepts. Gillette’s amended complaint alleges that Gillette owns, and that Defendants committed an unfair
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trade practice by making use of, “magnetic attachment, elastomeric pivot, and front-loading engagement design concepts.”
Gillette describes these three design concepts as follows. The concept of a “front-loading engagement design” is the idea of attaching a razor handle to a disposable shaving cartridge that contains razor blades by bringing the handle down onto the top of the cartridge. The concept of a “magnetic attachment” is the idea of using a combination of a magnetic and a mechanical engagement to keep the cartridge attached to the handle. The concept of an “elastomeric pivot” is the idea of designing a razor cartridge that can pivot and that uses an elastomeric element (i.e., a loop-like structure at least part of which is a polymer with elastic properties) to make the cartridge return to its original position.
ShaveLogic has shown that these general concepts were already publicly known and readily understood by people outside of Gillette who design disposable cartridge razors before the individual defendants started working for ShaveLogic. Thus Gillette cannot prove that any of these concepts was confidential information. See generally J. T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 736 (1970) (“The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret.” (quoting Restatement of Torts, § 757, comment b)).
Although Gillette vigorously contested this point in its summary judgment papers, and expressly alleged in its complaint that these concepts belonged only to Gillette, at oral argument Gillette conceded that none of these general concepts is confidential. The summary judgment record confirms that these ideas were publicly known before the individual defendants went to work for ShaveLogic.
Gillette’s claims under c. 93A therefore fail as a matter of law. Using publicly available information to compete is not an unfair trade practice. Jillian’s Billiard Club, 35 Mass. App. Ct. at 375-376.
1.1.1.1. Front-loading engagements are not and were not secret. Gillette itself publicly disclosed the concept of front-loading engagements in 1985 when it began selling its Atra razors. In 1990 Gillette began selling a razor called the Sensor that also uses a front-loading engagement. Gillette’s Atra and
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Sensor razors load from the same direction and roughly the same angle as the razor disclosed in ShaveLogic’s patent. In addition, Gillette’s competitor Schick has also been selling front-loading razors for years.
Gillette argued in its summary judgment papers that its Atra and Sensor razors are materially different from ShaveLogic’s designs because the Atra and Sensor cartridges attach to the razor handle at two points while the ShaveLogic cartridge attaches to its handle at a single point of contact.
But the idea that a stable razor system could be designed using cartridges that attach to a handle at a single point has also long been disclosed publicly. Gillette’s Mach 3 and Fusion products, both of which have been sold publicly for years, use single-point loading. It was therefore obvious to anyone skilled in the art that one could design a front-end loading razor that attaches to the cartridge at a single point. No confidential information from Gillette was needed to figure out that one could combine the idea of a front-loading engagement with the idea of using a single point of attachment.
Defendants committed no unfair trade practice by using well-known design principles or obvious combinations of them. See Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. 254, 267 (1980) (concepts that would be obvious to an inertial guidance engineer were not protectable as trade secrets); Strategic Directions Grp., Inc. v. Bristol-Myers Squibb Co., 293 F.3d 1062, 1065 (8th Cir. 2002) (obvious combination of known elements not a trade secret); Julie Research Labs., Inc. v. Select Photographic Eng’g, Inc., 998 F.2d 65, 67 (2d Cir. 1993) (particular combination of design choices not a trade secret if “obvious, widely known, easy for others to discover legitimately, or disclosed” publicly by manufacturer ).
1.1.1.2. Magnetic Attachments. The idea of using a combination of magnetic and mechanical means to attach a razor cartridge to a handle is also not secret and does not belong to Gillette. A Chinese patent published in 2009 (no. CN 101612740, or the “Jian patent”) and a United States patent published in 2000 (U.S. Patent No. 6,035,535) both disclose razors that use a combination of magnetic and mechanical engagements. Gillette cannot claim as
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confidential information that was publicly disclosed in a patent. See, e.g., Atlantic Research Mktg. Sys., Inc. v. Troy, 659 F.3d 1345, 1357 (Fed. Cir. 2011) (applying Massachusetts law).
Gillette has now conceded that the concept of using both a magnetic and a mechanical engagement is a publicly available idea or invention. It did so in a filing with the United States Patent and Trademark Office made by Gillette to challenge ShaveLogic’s patent for a razor using magnetic and mechanical engagements (U.S. Patent 8,789,282, or the “ ’282 patent”).2 Gillette made that filing in March 2016, just two months after Gillette filed its amended complaint in this case.
Whether the individual defendants knew of or relied upon the Jian patent in their work for ShaveLogic is immaterial. Gillette cannot prove that the concept of magnetic attachments was confidential if it had already been disclosed in a publicly available patent, whether or not Defendants had seen that prior patent. Gillette expressly argued to the Patent Office that the claims in ShaveLogic’s ’282 patent are not novel because the Jian patent had already made publicly available the idea that a shaving cartridge assembly can be mounted on a handled using a “magnetic and mechanical connection” between the two. Gillette’s statement to the Patent Office that this prior art was publicly available belies its unsupported claim to the contrary in this action. And Gillette’s Rule 30(b)(6) designee in this lawsuit confirmed under oath that the Jian patent discloses a means for a magnetic attachment and a mechanical attachment.
1.1.1.3. Elastomeric Pivots. Similarly, the idea of designing a shaving cartridge that pivots and is returned to its original position by
2 Gillette’s filing was a petition for Inter Partes review of ShaveLogic’s ’282 patent. An Inter Partes petition asks the Patent Office to reexamine the claims of a previously-issued patent and to determine whether any of them is invalid and should be cancelled because it is “unpatentable in light of prior art,” meaning either that the claimed invention is not novel because prior art shows that the invention was already known or used by others, or that the claimed invention is an obvious variation or combination of subject matter that was already known. Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131, 2136 (2016); see also 35 U.S.C. § 311(b) (scope of inter partes review), § 102 (requiring novelty to obtain patent), and § 103 (disqualifying patent claims that “would have been obvious … to a person having ordinary skill in the art to which the claimed invention pertains”).
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a loop with an elastomeric element is also publicly known and therefore cannot be Gillette confidential information. A company called King of Shaves received a United State patent first published in May 2005 (U.S. Patent no. 7,100,284) that disclosed the possibility of using an elastomeric loop to return a pivoting shaving cartridge to its original position. In addition, Gillette itself publicly disclosed several other ways of designing a razor that uses an elastomeric loop to return a pivoting razor cartridge to its original position. It did so in a United States patent that was first published in January 2011 (U.S. Patent 8,273,205 B2).
1.1.1.4. Source of Public Information Irrelevant. Since the general design concepts of front-loading engagements, magnetic attachments, and elastomeric pivots were not secret and did not belong to Gillette, the individual defendants were free to use those ideas even if they learned about these concepts while working for Gillette.
Although Gillette may bar a former employee from using Gillette’s confidential information against it, it “may not prevent the employee from using the skill and general knowledge acquired or improved through his employment.” Abramson v. Blackman, 340 Mass. 714, 715-16 (1960); accord, e.g., Richmond Bros., Inc. v. Westinghouse Broadcasting Co., Inc., 357 Mass. 106, 111 (1970); Woolley’s Laundry v. Silva, 304 Mass. 383, 387 (1939). Employees are free to quit their job, start working for a competitor, and use their “general knowledge, experience, memory and skill” to compete against their former employer. Dynamics Research, 9 Mass. App. Ct. at 267, quoting J. T. Healy & Son, 357 Mass. at 740; accord Club Aluminum Co. v. Young, 263 Mass. 223, 226-227 (1928).
If the individual defendants took skills they developed and public information they learned while working for Gillette, and used them to help ShaveLogic design new products to compete with Gillette, that would not constitute an unfair trade practice in violation of G.L. c. 93A as a matter of law.
1.1.2. Gillette Sketches or Models. Gillette also alleges that Defendants used Gillette confidential information that was contained in sketches, samples, or models of possible razor designs that were created at Gillette and kept by Craig Provost, John Griffin, and William Tucker when they stopped working
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there. Once again, however, the undisputed facts show that Gillette cannot prove that Defendants engaged in unfair competition by using those materials.
There is no evidence that any confidential information embodied in or discernable from those materials and items made its way into any ShaveLogic patent, patent application, or product design. Gillette concede this point at oral argument. Without evidence that any of the remaining Defendants actually used confidential Gillette information to design products for ShaveLogic, the mere fact that some of the individual defendants have Gillette materials in their possession cannot support a finding in Gillette’s favor on its claims under c. 93A.
Gillette argues that it need not show that Gillette confidential information reflected in these sketches, samples, or models became part of any ShaveLogic design, so long as it can prove that ShaveLogic could not have conceived of its patented inventions and other designs without using Gillette’s confidential information. At oral argument Gillette asserted that the expert opinion of Fred P. Smith, a mechanical engineer, provides evidence that Defendants could not possibly have come up with the razor design in ShaveLogic’s patent and patent applications without using confidential information regarding Gillette designs and prototypes found in the retained sketches, samples, and models.
This argument fails because it mischaracterizes Mr. Smith’s expert opinions. Mr. Smith states that he “was not asked to opine on what was confidential or a trade secret” but instead was told to assume that whatever information he was given by Gillette’s attorneys qualified as confidential information. He then explains his understanding that the general concepts of front-loading engagements, magnetic attachments, an elastomeric loop returns are confidential information that belong to Gillette. He also refers to some of the specific sketches or models retained by the individual defendants as examples of these general concepts. But Smith never opines that Defendants probably used confidential information contained in these sketches and models to design the ShaveLogic razors. Instead, Smith’s opinion is that Defendant could not have developed the ShaveLogic razors without using some part of all of the information he describes, including the three general concepts that were the focus of Gillette’s amended complaint.
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Mr. Smith’s opinions do not create any triable issue of fact because they are based on the mistaken assumption that the general concepts of front-loading engagements, magnetic attachments, and elastomeric returns belonged to Gillette, when in fact they were all publicly available information. At no point in Mr. Smith’s expert report does he conclude or opine that Defendants could not have developed ShaveLogic’s razor designs without using truly confidential information obtained from the sketches and models kept by the individual defendants.
Nor can Gillette salvage its c. 93A claims with evidence that an initial ShaveLogic design looks very similar to a purportedly confidential Gillette design. Gillette asserts that the initial design sketched out by ShaveLogic’s founder Robert Wilson for a razor using a magnetic attachment is very similar in appearance and functionality to a prototype design that belongs to Gillette and is shown in a sketch kept by defendant Craig Provost. This evidence cannot support Gillette’s unfair competition claims for two reasons. First, as discussed above, the idea of using magnetic attachments is public information and does not belong to Gillette. Second, the undisputed evidence shows that Wilson independently created his design in 2009 before he ever met Provost and the other individual defendants.
In sum, the summary judgment record makes clear that no reasonable fact finder could conclude that Defendants made use of any confidential information obtained from Gillette without engaging in rank speculation or conjecture. Defendants are therefore entitled to summary judgment on these claims.
1.2. Breach of Confidentiality Agreements. Gillette claims in Count II that each of the individual defendants breached contractual duties not to use or disclose Gillette’s confidential information.
Defendants are entitled to summary judgment on this claim because Gillette has mustered no evidence that any of the defendants used or disclosed any Gillette confidential information after they left Gillette to work for ShaveLogic. As explained above, Gillette cannot point to any evidence that the individual defendants used Gillette confidential information to design any product for ShaveLogic. Nor is there any evidence that the individual defendants used Gillette
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confidential information in any other way after leaving Gillette, or that they disclosed any such information to ShaveLogic.
The evidence on which Gillette relies cannot support a finding in Gillette’s favor on this contract claim. Mr. Griffin and Mr. Provost retained hard drives, documents, and razor models when they left Gillette, and Mr. Kohring retained backup copies of some old Gillette files. But no contract barred Defendants from retaining or looking at Gillette materials; their only obligation on this score was not to use or disclose Gillette confidential information. Merely possessing or even accessing arguably confidential information does not violate the parties’ contracts.
1.3. Civil Conspiracy. Gillette claims in Count IX that the remaining Defendants entered into a civil conspiracy “to misappropriate Gillette’s confidential information and trade secrets” and “to compete unfairly with Gillette.”3 This claim fails because, as explained above, there is no evidence that Defendants used any confidential information belonging to Gillette to benefit ShaveLogic.
To succeed on its claim for conspiracy, Gillette would have to prove at trial that Defendants acted together either (1) to exercise some power of coercion over the plaintiff that they would not have had if they had acted independently, or (2) pursuant to “a common plan to commit a tortious act.” Kurker v. Hill, 44 Mass. App. Ct. 184, 188-189 (1998); accord Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1563-1564 (1st Cir. 1994) (applying Massachusetts law).
Gillette alleges the second kind of civil conspiracy, involving a purportedly tortious “common plan.”
There can be no civil conspiracy of this kind without “an underlying tortious act” carried out by two or more defendants acting together. Bartle v. Berry, 80 Mass. App. Ct. 372, 383-384 (2011). “Key to this cause of action is a defendant’s substantial assistance, with the knowledge that such assistance is contributing to a common tortious plan.” Kurker, supra, at 189.
3 As noted above, the Court previously dismissed the portion of Count IX alleging a civil conspiracy to cause ShaveLogic’s general counsel to breach his fiduciary duty to Gillette.
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It is not clear that Gillette could prevail on its conspiracy claim even if it could prove its factual allegations, because neither the claimed unfair use of confidential information in violation of G.L. c. 93A nor the claimed breach of the nondisclosure agreements would constitute an underlying tortious act. See generally Kattar v. Demoulas, 433 Mass. 1, 12-13 (2000) (G.L. c. 93A creates substantive new rights by barring conduct that is neither a common law tort nor a breach of contract);4 Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365, 368 (1997) (breach of contract “is not a tort”).
Defendants would be entitled to summary judgment on this claim even assuming that the alleged misconduct could, in theory and if proved, satisfy the element of an underlying tortious act.
Gillette has no evidence that Defendants misappropriated Gillette’s confidential information or used it to compete unfairly with Gillette, as discussed above. Defendants are therefore entitled to judgment as a matter of law on the conspiracy claim. See Bartle, supra (affirming summary judgment for defendants).
1.4. Constructive Trust Remedy. Gillette claims in Count IV that the individual defendants used or disclosed Gillette confidential information for the benefit of ShaveLogic, that ShaveLogic has been unjustly enriched as a result, and that ShaveLogic’s ’282 patent and pending patent applications should therefore be subject to a constructive trust for the benefit of Gillette.
A constructive trust “is imposed ‘in order to avoid the unjust enrichment of one party at the expense of the other where the legal title to the property was
4 The Supreme Judicial Court has “classified some G.L. c. 93A claims as contract-based, others as tort-based, and still others as ‘neither wholly tortious nor wholly contractual in nature.’ ” Kraft Power Corp. v. Merrill, 464 Mass. 145, 156 (2013) (citations and footnotes omitted), quoting Kattar, 433 Mass. at 12. For example, “tort actions ‘for fraud and deceit are within the contemplation of an ‘unfair act’ under [G.L. c. 93A].’ ” Kraft Power, supra at n.16, quoting Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 778 (1986).
Gillette has not accused Defendants of committing an unfair trade practice by engaging in fraud or any other tortious act. Although Gillette previously claimed that Defendants committed the tort of misappropriating trade secrets, it has dismissed those claims with prejudice. The allegation that Defendants used Gillette’s confidential information to benefit ShaveLogic is the kind of c. 93A claim that is neither tort-based nor contractual in nature.
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obtained by fraud or in violation of a fiduciary relation or arose where information confidentially given or acquired was used to the advantage of the recipient at the expense of the one who disclosed the information.’” Meskell v. Meskell, 355 Mass. 148, 151 (1969), quoting Barry v. Covich, 332 Mass. 338, 342 (1955).
ShaveLogic is entitled to summary judgment in its favor on this claim because Gillette has no evidence that any of its confidential information was used or disclosed for the benefit of ShaveLogic. See Northrup v. Brigham, 63 Mass. App. Ct. 362, 370 (2005) (affirming summary judgment for defendant on constructive trust claim because record showed no unjust enrichment). Gillette makes no claim that ShaveLogic obtained its patent or developed its patent applications by fraud or in violation of a fiduciary obligation.
2. ShaveLogic’s Counterclaims. Gillette is not entitled to summary judgment on ShaveLogic’s two counterclaims because a reasonable jury could conclude that Gillette deliberately asserted baseless claims against ShaveLogic in an attempt to scare off ShaveLogic’s investors and potential business partners, and thereby drive ShaveLogic out of the market for wet-shaving products.
A claim cannot be resolved on a motion for summary judgment where “a reasonable jury could return a verdict for the nonmoving party.” Dennis v. Kaskel, 79 Mass. App. Ct. 736, 741 (2011), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For this reason, in evaluating the motion for summary judgment the Court “must … draw all reasonable inferences” from the evidence presented “in favor of the nonmoving party,” as a jury would be free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). A request for summary judgment must be denied where a claim turns on disputed issues of fact or on disputed inferences from admitted facts. See Molly A. v. Commissioner of Dept. of Mental Retardation, 69 Mass. App. Ct. 267, 284 (2007) (“summary judgment cannot be granted if the evidence properly before the motion judge reveals a genuine issue of disputed material fact”); Flesner v. Technical Communications Corp., 410 Mass. 805, 811-812 (1991) (“Where a jury can draw opposite inferences from the evidence, summary judgment is improper.”).
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2.1. Intentional Interference with Advantageous Relations. In its first counterclaim, ShaveLogic alleges that Gillette intentionally interfered with ShaveLogic’s relationships with investors and marketing and distribution companies for improper anti-competitive purposes and by improper means. Specifically, ShaveLogic claims that Gillette tortiously interfered with those relationships by threatening to bring and then filing a baseless lawsuit in an attempt to prevent ShaveLogic from entering the wet-shaving market.
To make out its claim for tortious interference with advantageous relations, ShaveLogic will have to prove that:
(1) [it] had an advantageous relationship with a third party (e.g., a present or prospective contract or employment relationship); (2) the defendant knowingly induced a breaking of the relationship; (3) the defendant’s interference with the relationship, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant’s actions.
Blackstone v. Cashman, 448 Mass. 255, 260 (2007).
Gillette argues that ShaveLogic cannot establish that Gillette intentionally interfered with any advantageous relationship. Specifically, Gillette asserts that there is no evidence that it was aware of any particular relationship between ShaveLogic and some third party or that Gillette did anything that in fact interfered with that relationship. These arguments are without merit.
A reasonable jury could find that Gillette knew that a new entrant to the market would need to establish relationships with manufacturing and distribution partners, that Gillette intended to interfere with ShaveLogic’s ability to form those relationships by bringing a baseless lawsuit, that Gillette succeeded in scaring off potential manufacturing and distribution partners from working with ShaveLogic, and that ShaveLogic suffered economic harm as a result. It would certainly be a permissible inference that Gillette was unhappy with ShaveLogic’s plans to market a competing razor and wanted to find a way to prevent ShaveLogic from consummating relationships with companies that could manufacture or distribute products for ShaveLogic. Indeed, Gillette complains in its complaint that ShaveLogic “actively leveraged” its relationships with former Gillette employees “to develop relations” with potential business and manufacturing partners and that
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Gillette was purportedly harmed by these attempts “to commercialize wet-shaving products for ShaveLogic.”
Gillette’s insistence that ShaveLogic must present direct evidence that Gillette knew that particular manufacturers or distributors were exploring business relationships with ShaveLogic is without merit. A party claiming tortious interference with prospective (rather than existing) business relationships is not required to prove that the defendant was aware of a potential relationship with a specific third party. It is enough that the defendant knowingly interfered with a prospective relationship between the plaintiff and an identifiable class or category of third persons. Dube v. Likins, 167 P.3d 93, 101 (Ariz. App. 2007); Downer’s Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 546 N.E.2d 33, 37 (Ill. App. 1989); Jae Enterprises, Inc. v. Oxgord, Inc., no. 5:15-CV-228-TBR, 2016 WL 865328, *12 (W.D. Kentucky 2016) (applying Kentucky law); Lucas v. Monroe County, 203 F.3d 964, 979 (6th Cir. 2000) (applying Michigan law); McDonald Apiary, LLC v. Starrh Bees, Inc., no. 8:14-CV-351, 2015 WL 11108873, *3 (D.Neb. 2015) (applying Nebraska law); Hayes v. Northern Hills General Hosp., 590 N.W.2d 243, 249-250 (S.D. 1999); Trau-Med of America, Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701 (Tenn. 2002).
2.2. Violation of G.L. c. 93A. In its second counterclaim, ShaveLogic asserts that the same alleged misconduct by Gillette, in purportedly threatening to bring and then filing a baseless lawsuit in an attempt to prevent ShaveLogic from entering the wet shaving market, constitutes an unfair trade practice that violates G.L. c. 93A, §§ 2 and 11.
Gillette argues that this claim fails because ShaveLogic has no direct evidence that Gillette knew its claims were baseless when it filed suit. This argument is also without merit.
“There is no need to prove actual knowledge” through direct evidence; “it may be inferred from the circumstances.” Commonwealth v. Aponte, 71 Mass. App. Ct. 758, 762 (2008). And “the inferences drawn by a jury from the relevant evidence ‘need only be reasonable and possible and need not be necessary or inescapable.’ ”
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Commonwealth v. Sullivan, 469 Mass. 621, 624 (2014), quoting Commonwealth v. Casale, 381 Mass. 167, 173 (1980).
A reasonable fact finder could infer that Gillette deliberately brought baseless claims against ShaveLogic in order to interfere with prospective business relationships. It could draw such an inference from the facts that Gillette: asserted but then dismissed trade secret claims; is unable to present any evidence that Defendants misused Gillette’s confidential information; claimed in this litigation that Gillette owns the concept of magnetic attachments, but argued to the United States Patent Office that this concept was publicly known; claimed that widely-known design concepts belong to Gillette but then conceded that was incorrect. As a result, Gillette is not entitled to summary judgment on ShaveLogic’s claim under c. 93A. See G.S. Enterprises, Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 276 (1991) (reversing summary judgment for defendant on similar claim).
There is also no merit to Gillette’s further assertion that it cannot be held liable under c. 93A because it had no direct commercial relationship with ShaveLogic. A claimant can prove that a defendant’s alleged malfeasance took place in a business context, and thus implicates c. 93A, by showing either “that the defendant had a commercial relationship with the plaintiffs or that the defendant’s actions interfered with ‘trade or commerce’ ” in some other way. See First Enterprises, Ltd. v. Cooper, 425 Mass. 344, 347 (1997). “Parties need not be in privity for their actions to come within the reach of c. 93A.” Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. 53, 60 (2002), quoting Kattar, 433 Mass. at 14–15. For example, a lawyer can be sued under c. 93A for knowingly or recklessly conveying false information in order to help a client bring about a commercial transaction with a third party. See, e.g., Kirkland Const. Co. v. James, 39 Mass. App. Ct. 559, 563-564 (1995) (reversing dismissal of 93A claim against lawyers who conveyed alleged misrepresentation by client and thereby allegedly induced plaintiff to contract with client). It follows that knowingly conveying false information by bringing a baseless lawsuit to interfere with prospective commercial transactions also violates c. 93A.
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It is true that the mere filing or a lawsuit or conduct of litigation does not, in and of itself, constitute trade or commerce within the meaning of c. 93A. See, e.g., Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 564 (2008); Morrison v. Toys “R” Us, Inc., 441 Mass. 451, 457 (2004); First Enterprises, 425 Mass. at 347.
But “each case requires examination of its own circumstances to determine whether it arose in a ‘business context.’ ” Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 24 (1997) (holding defendant’s status as charitable corporation not dispositive of whether c. 93A applies), quoting Planned Parenthood Fed’n of America, Inc. v. Problem Pregnancy of Worcester, Inc., 398 Mass. 480, 493 (1986).
A reasonable fact finder could conclude that Gillette was acting in a business context because it brought a baseless lawsuit in an attempt to keep ShaveLogic from entering the wet-shaving market. Such conduct, if proved at trial, would constitute an unfair trade practice in violation of c. 93A. See G.S. Enterprises, 410 Mass. at 273-274, 277 (bringing baseless lawsuit in order to block purchase of property would violate G.L. c. 93A, §§ 2(a) and 11; reversing grant of summary judgment in favor of defendant); Brooks Automation, Inc. v. Blueshift Technologies, Inc., Suffolk Sup. Ct. 05-3973-BLS2, 20 Mass. L. Rptr. 541, 2006 WL 307848 (2006) (Gants, J.) (filing frivolous complaint “becomes an act done in the conduct of trade or commerce when, as here, it is motivated by an intent to interfere with a competitor’s contractual relationship with a key and much coveted customer”), aff’d, 69 Mass. App. Ct. 1107 (2007) (unpublished).
2.3. Litigation Privilege. Gillette argues that the conduct giving rise to ShaveLogic’s counterclaims is absolutely protected by the common law privilege for statements made during a judicial proceeding or in connection with a contemplated lawsuit. Cf. Correllas v. Viveiros, 410 Mass. 314, 320 (1991); Sriberg v. Raymond, 370 Mass. 105, 108-109 (1976).
Gillette made the same litigation privilege argument when it moved to dismiss ShaveLogic’s counterclaims earlier in the case. The court (Sanders, J.) rejected that argument when it denied Gillette’s motion to dismiss the counterclaims. Judge Sanders held that the “conduct of filing (and threatening to file) a baseless lawsuit” is not protected by the litigation privilege. Gillette appealed.
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The Appeals Court recently affirmed that ruling, holding that the litigation privilege does not require dismissal of ShaveLogic’s counterclaims because they are based on “Gillette’s purported acts of sending letters threatening a baseless lawsuit with the knowledge that ShaveLogic would have to disclose them to potential partners and investors, and then actually filing a baseless lawsuit[].”The Gillette Co. v. Provost, 91 Mass. App. Ct. 133, 141 (2017). It explained “that statements preliminary to litigation are only privileged if they ‘relat[e] to a proceeding [that] is contemplated in good faith[].” Id. at 142, quoting Sriberg, supra, at 109.
The Appeals Court’s decision disposes of Gillette’s invocation of the litigation privilege. For the reasons stated above, the summary judgment record demonstrates that ShaveLogic will be able to present evidence that would allow a reasonable jury to conclude that Gillette’s threats to sue ShaveLogic and its actual conduct in bringing and prosecuting this lawsuit were not made in good faith, because Gillette knew or should have known that it could not prove any of its claims. As a result, the litigation privilege does not bar ShaveLogic’s counterclaims.
2.4. Anti-SLAPP Arguments. Finally, Gillette also argues that ShaveLogic’s counterclaims must be dismissed under G.L. c. 231, § 59H, the so-called anti-SLAPP (strategic lawsuits against public participation) statute.
Once again, Judge Sanders already considered and rejected this argument when she denied Gillette’s motion to dismiss the counterclaims. And, once again, the Appeals Court affirmed that ruling. It held that Gillette was not entitled to dismissal under the anti-SLAPP statute because ShaveLogic “met its burden of showing that Gillette’s petitioning activity was ‘devoid of any reasonable factual support’ and caused ShaveLogic ‘actual injury.’ ” Gillette v. Provost, 91 Mass. App. Ct. at 134, quoting § 59H..
There is no reason to revisit this issue. The summary judgment record confirms the prior conclusions by Judge Sanders and the Appeals Court that Gillette’s claims are devoid of any factual support. As discussed above, the summary judgment record confirms that the general concepts of using magnetic attachments, front-loading engagements, and elastomeric pivots and returns in shaving razors have all been publicly known for a long time. Gillette has been unable to muster any
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evidence that ShaveLogic used any Gillette confidential information in developing its product. And the summary judgment also confirms that ShaveLogic has evidence that if suffered actual injury as a result of Gillette’s actions in filing and pursuing this baseless lawsuit. The anti-SLAPP statute therefore does not apply.
The Court would exercise its discretion not to reconsider Judge Sander’s denial of the anti-SLAPP motion to dismiss even Judge Sanders and the Appeals Court had not already addressed the issue. A special motion to dismiss may be filed as of right under the anti-SLAPP statute within 60 days of the service of the challenged claims. See G.L. c. 231, § 59H. A court has discretion to allow such a motion to be filed “at any later time upon terms it deems proper,” but is not required to do so. Id. Thus, “[t]he anti-SLAPP statute contemplates that, ordinarily, a special motion to dismiss is to be brought within sixty days of the service of the complaint[.]” Burley v. Comets Cmty. Youth Ctr., Inc., 75 Mass. App. Ct. 818, 822 (2009). Gillette has no right to assert or reassert an anti-SLAPP defense in a motion for summary judgment brought after the close of discovery, and far more than sixty days after ShaveLogic asserted its counterclaims.
ORDER
Defendants’ motion for summary judgment as to Plaintiff’s claims against them is ALLOWED. Plaintiff’s cross-motion for summary judgment as to Defendants’ counterclaims is DENIED.
A final pre-trial conference will be held on May 23, 2017, at 2:00 p.m. to discuss resolution of ShaveLogic’s counterclaims against Gillette, which are the only claims that remain in the case.
April 18, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 12:57 pm

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CRA International, Inc. v. Painter (Lawyers Weekly No. 12-039-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV02417-BLS2
____________________
CRA INTERNATIONAL, INC.
v.
DONALD J. PAINTER
____________________
MEMORANDUM AND ORDER ALLOWING PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS AND MOTION TO DISMISS COUNTERCLAIM
This lawsuit arises from CRA International, Inc.’s short-lived employment of Donald J. Painter. CRA seeks a declaration that, because Mr. Painter worked for CRA for less than a year, Painter is contractually obligated to repay his $ 30,000 signing bonus and a $ 900,000 loan, pay all interest that has accrued on that loan, and reimburse CRA for reasonable attorneys’ fees and expenses incurred to collect that loan. Painter asserts that his employment agreement and promissory note were induced by intentional fraud or negligent misrepresentations and are therefore “invalid” and unenforceable. He also asserts a counterclaim for fraud and seeks leave to amend facts alleged in his counterclaim.
The Court concludes that CRA is entitled to the dismissal of Painter’s counterclaim and that Painter’s proposed amendment of his counterclaim would be futile. It also concludes that, given the facts admitted by Painter in his answer and the failure of his fraud in the inducement defense, CRA is entitled to judgment in its favor on its claim for declaratory judgment. The Court will allow CRA’s motion for judgment on the pleadings and to dismiss Painter’s counterclaim, deny Painter’s motion to amend his counterclaim, deny CRA’s motion to strike Painter’s jury demand as moot, and order the entry of a declaratory judgment in CRA’s favor.
1. CRA’s Motion to Dismiss the Counterclaim. Painter’s counterclaim for fraud fails as a matter of law because it does not allege any facts plausibly suggesting that CRA made a false statement of material fact to Painter or that CRA failed to disclose some material information that it had a duty to disclose. See generally Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (to survive a motion to dismiss under Mass. R. Civ. P. 12(b)(6), a complaint or counterclaim must allege facts that, if true, would “plausibly suggest[] … an entitlement to relief”) (quoting Iannacchino v. Ford
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Motor Co., 451 Mass. 623, 636 (2008), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Painter’s proposed amendment to his counterclaim would be futile for the same reasons.
1.1. The Counterclaim Fails to Allege Any Fraud with Particularity. A claim of fraudulent inducement must be alleged with particularity in accord with Mass. R. Civ. P. 9(b). See VMS Realty Inv., Ltd. v. Keezer, 34 Mass. App. Ct. 119, 119-120 (1993). This rule “heightens the pleading requirements placed on plaintiffs who allege fraud and deceit.” Equipment & Systems for Industry, Inc. v. NorthMeadows Constr. Co., Inc., 59 Mass. App. Ct. 931, 932 (2003) (rescript). Thus, “at a minimum,” Painter must support any claim of fraudulent inducement by specifically alleging “the identity of the person(s) making the” allegedly fraudulent “representation, the contents of the misrepresentation, and where and when it took place,” and must also “specify the materiality of the misrepresentation, [his] reliance thereon, and resulting harm.” Id. at 931-932.
Painter’s existing counterclaim is based on two alleged misrepresentations by CRA. Neither is sufficient to support a counterclaim for fraud.
The allegation that CRA told Painter that CRA had “done recent work with a few major clients in the U.S. oil and gas market” is too vague to support Painter’s counterclaim. To state a claim for fraud, a claimant must allege facts plausibly suggesting that the defendant knowingly made a false statement of material fact, that it did so for the purpose of inducing the claimant to act on it, and that the claimant reasonably relied upon that false statement to his detriment. See Masingill v. EMC Corp., 449 Mass. 532, 540 (2007). Vague and general statements cannot constitute an unlawful misrepresentation of fact. Id. at 544 (alleged representation to employee that supervisor will “make you whole” held “too vague” to support a claim for misrepresentation, as a matter of law). It is not reasonable, as a matter of law, to rely upon “vague and indefinite” statements like the one CRA allegedly made regarding recent work. See Martins v. University of Massachusetts Medical School, 75 Mass. App. Ct. 623, 633 (2009).
The further allegation that CRA asked Painter to confirm that he would commit himself to working to grow CRA’s Marakon oil and gas industry consulting
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practice for six to seven years cannot support a counterclaim for fraud. Asking a potential employee about his commitment to a business is not a statement of fact and therefore cannot give rise to a claim for fraud. Cf. Sahin v. Sahin, 435 Mass. 396, 403 (2001) (“statements of opinion or belief as to business operations, made without certainty, do not rise to level of statements of fact and do not constitute fraudulent misrepresentations”).
1.2. The Proposed Amended Counterclaim Would Be Futile. Mr. Painter seeks leave to amend his counterclaim in an attempt to bolster the factual premise for his claim of fraud. The Court will deny this motion because the proposed amendment would be futile, in that the amended counterclaim still could not survive a motion under 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).
Painter’s proposed amended counterclaim would augment the factual allegations underlying his counterclaim in two ways. Neither of these additional categories of allegations would state a viable claim for fraud.
First, Painter seeks to allege that CRA withheld material information from him. Specifically, the amended counterclaim would allege that CRA failed to disclose that its prior oil and gas consulting clients were all clients of former CRA employees who no longer worked for the company. It would also allege that CRA failed to disclose material facts regarding the financial condition and performance of its Marakon unit.
These allegations that CRA withheld information from Painter cannot support a claim for fraud because Painter alleges no facts plausibly suggesting that CRA had any duty to disclose that information to Painter. “Fraud by omission requires both concealment of material information and a duty requiring disclosure.” Sahin v. Sahin,
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435 Mass. 396, 402 n.9 (2001). “A duty to disclose exists where ‘(i) there is a fiduciary or other similar relation of trust and confidence, (ii) there are matters known to the speaker that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading, or (iii) the nondisclosed fact is basic to, or goes to the essence of, the transaction.’ ” Knapp v. Neptune Towers Assocs., 72 Mass. App. Ct. 502, 507 (2008), quoting Stolzoff v. Waste Sys. Intl., Inc., 58 Mass. App. Ct. 747, 763 (2003). The amended complaint does not plausibly suggest that any of these circumstances was present here.
The amended counterclaim would not suggest that CRA had a fiduciary or similar relationship with Painter. When a company like CRA tries to recruit an executive like Painter, those negotiations do not establish a fiduciary relationship or some other relationship of trust and confidence that would carry with it a duty on the part of the company to disclose information about its operations and business prospects. Indeed, even once an employment relationship is formed the employer still does not have any fiduciary or other duty to tell its employees or prospective employees information about the employer’s business prospects. See Ross v. Burrage, 233 Mass. 439, 446-448 (1919).
Nor would the amended counterclaim suggest that the allegedly undisclosed information went to the essence of the transaction or caused anything Painter was told to be misleading. According to Painter, CRA made clear that it was not well-established in the United States market for oil and gas consulting firms and that it had no current clients in that market; all that CRA represented was that it had “done recent work with a few major clients in the U.S. oil and gas market.” In Painter’s email communications with CRA before he was hired, which are summarized in the proposed amended complaint and attached to it as exhibits, Painter makes clear he knew that Marakon was not making any money and that Painter would have to land or help land new clients in order to turn it into a profitable business. Painter alleges that he told CRA it would take him at least two years and possibly longer to turn Marakon into a profitable operation.
Since Painter acknowledges that he had years of experience in the field, he “should have inquired” if he was “interested in more specific information.” Knapp,
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72 Mass. App. Ct. at 509. CRA had no affirmative duty to volunteer and provide additional information regarding the weakness of its market position. Id.
Second, Painter also seeks to allege that, during the same conversation when CRA asked Painter to confirm that he would be committed to CRA’s Marakon consulting practice for six to seven years, CRA itself told Painter that it was “definitely committed” to a six to seven year process of growing its oil and gas practice.
These allegations cannot support a claim for fraud because Painter alleges no facts plausibly suggesting that CRA’s stated commitment to its Marakon practice was false when made. To the contrary, the proposed amended counterclaim would allege that in May 2016 CRA “made an abrupt and disappointing decision to dissolve Marakon’s America’s Oil and Gas Practice.” Thus, Painter’s own allegations make clear that CRA changed its mind, not that CRA deliberately misled Painter when it allegedly said in 2015 that it was committed to supporting efforts by Painter to grow the Marakon business.
A plaintiff may base a claim of misrepresentation upon a false promise, rather than a false representation of fact, only if the plaintiff alleges facts plausibly suggesting that that “the promisor had no intention to perform the promise at the time it was made.” See Cumis Ins. Society v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 474 (2009), quoting Yerid v. Mason, 341 Mass. 527, 530 (1960). It is not enough for Painter to allege that CRA promised to keep the Marakon business going and did not keep that commitment, because an “intention not to perform a promise” cannot be inferred merely from later “nonperformance of the promise.” Galotti v. United States Trust Co., 335 Mass. 496, 501 (1957); accord McCartin v. Westlake, 36 Mass. App. Ct. 221, 230 n.11 (1994). “Changing one’s mind is not proof that an earlier statement was false.” Backman v. Smirnov, 751 F. Supp. 2d 304, 316 n.13 (D. Mass. 2010) (Stearns, J.) (applying Massachusetts law).
2. CRA’s Motion for Judgment on the Pleadings on Its Claims. As the plaintiff in this action, CRA may obtain judgment on the pleadings in its favor if, “on the undenied facts alleged in the complaint and assuming as true all the material allegations of fact in the answer, the plaintiff is entitled to judgment as a matter of law.” See United States v. Blumenthal, 315 F.2d 351, 352 (3d Cir.1963); accord, e.g.,
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New Zealand Lamb Co., Inc. v. United States, 40 F.3d 377, 380 (Fed. Cir. 1994). “In other words, if a defendant’s answer admits, alleges, or fails to deny facts which, taken as true, would entitle a plaintiff to relief on one or more claims supported by the complaint, then the plaintiff’s Rule 12(c) motion should be granted.” Lowden v. County of Clare, 709 F. Supp. 2d 540, 546 (E.D. Mich. 2010).1
2.1. Facts Admitted in Painter’s Answer. Mr. Painter has admitted in his answer that the following facts are true.
Painter began interviewing for a job at CRA in March 2015. Ultimately, CRA offered Painter employment as a Vice President in CRA’s Marakon North American management consulting practice, where Painter was to be in charge of building an oil and gas consulting advisory business. Painter accepted CRA’s offer.
CRA and Painter both executed an Offer Letter on or about April 23, 2015. This offer letter stated that Painter’s employment was at will, and that either party could “choose to end the employment relationship at any time and for any reason on sixty days’ written notice. This letter contained an integration clause stating that it “constitutes the entire agreement with respect to this offer of employment with CRA, and supersedes all other prior agreements and understandings, both written and oral, with respect to [Painter’s] employment with CRA.
The offer letter stated that CRA would pay Painter $ 400,000 per year plus a one-time signing bonus of $ 30,000, and that Painter would also be eligible for additional discretionary bonuses. The letter also provided that if Painter’s employment with CRA were to end within twelve months after he first started working at CRA, then Painter would have to repay the entire $ 30,000 signing bonus within thirty days of his departure from CRA.
In addition, the offer letter accepted by Painter provided that CRA would loan Painter $ 900,000 for three years. This was a forgivable loan, with forgiveness conditioned on Painter continuing to be employed by CRA. The offer letter provided that Painter had to repay one-third of the loan principal plus all accrued interest on each of Painter’s first, second, and third anniversaries with CRA, but that those
1 Cf. Smaland Beach Ass’n, Inc. v. Genova, 461 Mass. 214, 228 (2012) (judicial construction of federal rules of civil procedure applies to parallel state rules).
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payments would be refunded and those obligations would be forgiven if Painter was still employed by CRA on each anniversary. It also provided that if Painter’s employment with CRA were to end before the forgiveness of the loan was completed, then Painter would have to repay any remaining unforgiven loan balance, including accrued and unforgiven interest, within thirty days of leaving CRA. In addition, the offer letter provided that if CRA had to initiate collection activities to collect unpaid loan principal or interest, then Painter would be obligated to pay CRA for any reasonable legal fees or expenses incurred to collect the loan. Painter also executed a promissory note reiterating the same obligations to repay unforgiven loan amounts and to compensate CRA for reasonable attorneys’ fees and expenses.
Painter started working for CRA on July 20, 2015. During the spring of 2016 CRA notified Painter that his employment would be terminated. Painter’s employment with CRA ended on July 9, 2016, less than one year after he started working for CRA.
CRA offered Painter a separation package that would include forgiveness of one-third of the $ 900,000 loan principal, all accrued interest on the loan, and the full $ 30,000 signing bonus, in exchange for Painter releasing any claims he may have against CRA. Painter did not accept that offer.
Painter has not repaid the signing bonus or any part of the loan principal or accrued interest.
In June 2016 Painter’s legal counsel sent a demand letter to CRA. The letter asserted that Painter had no obligation to repay his signing bonus or the $ 900,000 loan. It also asserted that CRA had fraudulent induced Painter to join CRA and that Painter had suffered compensable damages as a result.
2.2. CRA Is Entitled to Judgment as a Matter of Law. If Painter’s employment agreement and promissory note are enforceable, then CRA is entitled to recoup the $ 30,000 signing bonus, the $ 900,000 loan, all interest that has accrued on that loan, and any legal fees and expenses that CRA reasonably incurred in collecting the loan principal and interest. Painter concedes that he worked for CRA for less than one year. And the plain terms of the offer letter that Painter accepted provide that Painter must therefore pay or repay these amounts.
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Painter tries to avoid this result by asserting an affirmative defense that CRA fraudulently induced him to enter into this employment agreement in the first place. If Painter had been induced to accept and sign the offer letter by some kind of deliberate fraud, then his employment agreement with CRA would be voidable. See Shaw’s Supermarkets, Inc. v. Delgiacco, 410 Mass. 840, 842 (1991) (“A contract induced by fraudulent misrepresentations is voidable, not void. … The rule applies in the employment context as well.”). As explained above, however, Painter’s counterclaim for fraud fails as a matter of law because Painter does not allege with the requisite particularity that CRA made any fraudulent misrepresentations while recruiting Painter. It necessarily follows that Painter’s affirmative defense of fraudulent inducement fails as a matter of law as well. An affirmative defense of fraudulent inducement must be pleaded with particularity; as a result, “the defense of fraud is not available” to a defendant who fails to state with sufficient particularity “the circumstances constituting fraud.” DiPietro v. Sipex Corp., 69 Mass. App. Ct. 29, 39 (quoting Mass. R. Civ. P. 9(b)), rev. denied, 450 Mass. 1102 (2007).
Nor can Painter avoid his contractual obligations on a theory that he was induced to sign the employment agreement and promissory note by negligent misrepresentations that were not intentionally fraudulent. Painter asserts an affirmative defense that his acceptance of the CRA’s offer was induced by negligent misrepresentations. He was not required to do so with particularity, because under Massachusetts law the heightened pleading requirements of Rule 9(b) do not apply to claims of negligent misrepresentation. See DeWolfe v. Hingham Centre, Ltd., 464 Mass. 795, 798 n.8 (2013) (construing complaint that alleged “material misrepresentation” as stating claim for negligent misrepresentation because “fraud has not been pleaded with sufficient particularity to state a claim for intentional or reckless misrepresentation”). A contract may be voidable if a party was induced to enter into it by a nonfraudulent, negligent misrepresentation of a material fact. See Yorke v. Taylor, 332 Mass. 368, 373-374 (1955); Restatement (Second) of Contracts § 164 and comment b (1981). But Painter’s negligent misrepresentation defense is barred the contractual merger clause, in which Painter agreed that that the written employment agreement superseded any prior understandings with
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respect to Painter’s employment by CRA. Such a provision does not bar a claim or defense of intentional fraud in the inducement, but it does bar claims or defenses of unintentional, negligent misrepresentations of fact. See Sound Techniques, Inc. v. Hoffman, 50 Mass. App. Ct. 425, 429-434 (2000), rev. denied, 433 Mass. 1102 (2001).
In any case, CRA would be entitled to judgment as a matter of law on its affirmative claims as to repayment of the signing bonus and loan even if Painter’s affirmative defenses that he was induced to sign the employment agreement through fraud or negligent misrepresentation were legally viable, which they are not.
Assuming that Painter could prove his affirmative defenses of inducement by fraud or negligent misrepresentation, he could have his entire employment agreement rescinded or he could choose to have the agreement remain in place. But he would not have the option of accepting the parts of the contractual arrangement that he liked and selectively voiding the others. “[U]nless rescinded ‘a voidable contract imposes on the parties the same obligations as if it was not voidable.’” Berenson v. French, 262 Mass. 247, 260-261 (1928), quoting Williston, Contracts, § 15 (1920); accord 27 Williston on Contracts § 69:55 (4th ed. 2003) (though fraud may be a ground to reform a written contract or instrument, fraud perpetrated to induce party to enter into agreement is only ground for rescission, not reformation).
If Painter could prove fraud or negligent misrepresentation in the inducement, he could not rescind his employment agreement with CRA unless he repaid the signing bonus and loan.2 See, e.g., Jurewicz v. Jurewicz, 317 Mass. 512, 517 (1945) (“The plaintiff in rescinding the transaction as voidable for fraud must give up all she received under it.”); Mullen v. Old Colony R. Co., 127 Mass. 86, 89 (1879) (“It is well established that, if a party enters into a contract and in consideration of so doing receives money or merchandise, and afterward seeks to avoid the effect of such contract as having been fraudulently obtained, he must first give back to the other party the consideration received.”).
2 CRA implicitly concedes that Painter would be entitled to retain his $ 400,000 annual salary as fair compensation for his year of work on behalf of CRA. Painter has not claimed or argued that the principle of quantum meruit would also entitle him to keep his $ 30,000 signing bonus or the $ 900,000 loan, which Painter had agreed by contract must be repaid if his employment lasted less than one year.
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In sum, Painter must repay the loan and signing bonus whether his employment agreement is voidable on the ground of fraudulent inducement or not. If Painter had a viable counterclaim for fraud, then he would have a viable defense to CRA’s contract claim for attorneys’ fees and legal expenses. But he would still have to repay the signing bonus and loan. And since the facts alleged by Painter in support of his counterclaim make clear that he has no affirmative defense of inducement by fraudulent or negligent misrepresentation, CRA is entitled to judgment in its favor with respect to its legal fees and expenses as well.
ORDER
Plaintiff’s motion for judgment on the pleadings and motion to dismiss counterclaim is ALLOWED. Defendant’s motion for leave to amend his counterclaim is DENIED as futile. Plaintiff’s motion to strike Defendant’s jury demand is DENIED as moot.
Final judgment shall enter dismissing Defendant’s counterclaim with prejudice and declaring that: (1) Donald J. Painter is obligated to repay to CRA International, Inc., the $ 30,000 signing bonus previously provided to Mr. Painter by CRA; (2) Mr. Painter is also obligated to repay to CRA the $ 900,000 principal amount of CRA’s prior loan to Mr. Painter and is also obligated to pay CRA all accrued interest on that loan amount plus any reasonable attorneys’ fees and other legal expenses that were reasonably incurred by CRA in collecting this loan; and (3) CRA did not engage in unlawful misrepresentation toward Mr. Painter and owes him no compensation for any damages.
April 11, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 9:23 am

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The Gillette Company v. Provost, et al. (Lawyers Weekly No. 12-040-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1584CV00149-BLS2
____________________
THE GILLETTE COMPANY
v.
CRAIG PROVOST, JOHN GRIFFIN, WILLIAM TUCKER, DOUGLAS KOHRING, and SHAVELOGIC, INC.
____________________
MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
The Gillette Company alleges that four former employees helped ShaveLogic, Inc., develop a new disposable cartridge shaving razor using Gillette’s confidential information. Gillette claims that in so doing Defendants violated G.L. c. 93A, the individual defendants breached non-disclosure agreements with Gillette, and all five Defendants engaged in a civil conspiracy. It also claims that ShaveLogic’s patents and patent applications should be subjected to a constructive trust in favor of Gillette. Gillette does not claim that any of the individual defendants breached a covenant not to compete with Gillette. The parties previously stipulated to the dismissal with prejudice of Gillette’s trade secret claims.1
ShaveLogic claims, in turn, that Gillette intentionally interfered with prospective business relations and violated c. 93A, by threatening to bring and then filing baseless legal claims in an attempt to keep ShaveLogic from entering the market for so-called wet-shaving products.
The parties have filed cross-motions for summary judgment on all remaining claims and counterclaims. The Court concludes that Defendants are entitled to summary judgment in their favor on Gillette’s remaining claims because Gillette cannot prove that Defendants misused any of Gillette’s confidential information or that the individual defendants breached any non-disclosure agreement. The Court
1 The Court (Salinger, J.) previously ordered the dismissal with prejudice of Gillette’s claims against three other defendants. It dismissed Gillette’s claims that ShaveLogic’s general counsel breached fiduciary duties that he owed as a former Gillette patent counsel and that ShaveLogic’s CEO, its president, and the other individual defendants aided and abetted that alleged breach of fiduciary duty and conspired to bring it about.
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also concludes that Gillette is not entitled to summary judgment on ShaveLogic’s counterclaims because a reasonable fact finder could conclude that Gillette had deliberately brought baseless claims in an attempt to bully ShaveLogic out of the market. The Court will schedule a final pre-trial conference to discuss trial of ShaveLogic’s counterclaims.
1. Gillette’s Claims. Defendants are entitled to summary judgment in their favor on Gillette’s remaining claims because the undisputed material facts show that Gillette has “no reasonable expectation of proving” at least one element of each of its claims. See Boazava v. Safety Ins. Co., 462 Mass. 346, 350 (2012). “A nonmoving party’s failure to establish an essential element of her claim ‘renders all other facts immaterial’ and mandates summary judgment in favor of the moving party.” Roman v. Trustees of Tufts College, 461 Mass. 707, 711 (2012), quoting Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711 (1991).
1.1. Unfair Competition—G.L. c. 93A. In Counts III and VIII of its amended complaint, Gillette claims that the remaining Defendants used confidential information belonging to Gillette to design competing products that ShaveLogic has patented or is seeking to patent, and that this constitutes an unfair trade practice in violation of G.L. c. 93A. The intentional misappropriation and use of trade secrets to compete against the owner of that confidential information can violate c. 93A. See Jillian’s Billiard Club of America, Inc. v. Beloff Billiards, Inc., 35 Mass. App. Ct. 372, 373-375 & 377 (1993).
Since Gillette has been unable to muster any evidence that Defendants used Gillette’s confidential information to develop razors for ShaveLogic, Defendants are entitled to summary judgment on these claims. See Kourouvacilis, supra, at 715 (“If the nonmoving party cannot muster sufficient evidence to make out its claim, a trial would be useless and the moving party is entitled to summary judgment as a matter of law.” (quoting Celotex Corp. v. Catret, 477 U.S. 317, 328 (1986) (White, J., concurring)).
1.1.1. Using Well Known Concepts. Gillette’s amended complaint alleges that Gillette owns, and that Defendants committed an unfair
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trade practice by making use of, “magnetic attachment, elastomeric pivot, and front-loading engagement design concepts.”
Gillette describes these three design concepts as follows. The concept of a “front-loading engagement design” is the idea of attaching a razor handle to a disposable shaving cartridge that contains razor blades by bringing the handle down onto the top of the cartridge. The concept of a “magnetic attachment” is the idea of using a combination of a magnetic and a mechanical engagement to keep the cartridge attached to the handle. The concept of an “elastomeric pivot” is the idea of designing a razor cartridge that can pivot and that uses an elastomeric element (i.e., a loop-like structure at least part of which is a polymer with elastic properties) to make the cartridge return to its original position.
ShaveLogic has shown that these general concepts were already publicly known and readily understood by people outside of Gillette who design disposable cartridge razors before the individual defendants started working for ShaveLogic. Thus Gillette cannot prove that any of these concepts was confidential information. See generally J. T. Healy & Son v. James A. Murphy & Son, 357 Mass. 728, 736 (1970) (“The subject matter of a trade secret must be secret. Matters of public knowledge or of general knowledge in an industry cannot be appropriated by one as his secret.” (quoting Restatement of Torts, § 757, comment b)).
Although Gillette vigorously contested this point in its summary judgment papers, and expressly alleged in its complaint that these concepts belonged only to Gillette, at oral argument Gillette conceded that none of these general concepts is confidential. The summary judgment record confirms that these ideas were publicly known before the individual defendants went to work for ShaveLogic.
Gillette’s claims under c. 93A therefore fail as a matter of law. Using publicly available information to compete is not an unfair trade practice. Jillian’s Billiard Club, 35 Mass. App. Ct. at 375-376.
1.1.1.1. Front-loading engagements are not and were not secret. Gillette itself publicly disclosed the concept of front-loading engagements in 1985 when it began selling its Atra razors. In 1990 Gillette began selling a razor called the Sensor that also uses a front-loading engagement. Gillette’s Atra and
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Sensor razors load from the same direction and roughly the same angle as the razor disclosed in ShaveLogic’s patent. In addition, Gillette’s competitor Schick has also been selling front-loading razors for years.
Gillette argued in its summary judgment papers that its Atra and Sensor razors are materially different from ShaveLogic’s designs because the Atra and Sensor cartridges attach to the razor handle at two points while the ShaveLogic cartridge attaches to its handle at a single point of contact.
But the idea that a stable razor system could be designed using cartridges that attach to a handle at a single point has also long been disclosed publicly. Gillette’s Mach 3 and Fusion products, both of which have been sold publicly for years, use single-point loading. It was therefore obvious to anyone skilled in the art that one could design a front-end loading razor that attaches to the cartridge at a single point. No confidential information from Gillette was needed to figure out that one could combine the idea of a front-loading engagement with the idea of using a single point of attachment.
Defendants committed no unfair trade practice by using well-known design principles or obvious combinations of them. See Dynamics Research Corp. v. Analytic Sciences Corp., 9 Mass. App. Ct. 254, 267 (1980) (concepts that would be obvious to an inertial guidance engineer were not protectable as trade secrets); Strategic Directions Grp., Inc. v. Bristol-Myers Squibb Co., 293 F.3d 1062, 1065 (8th Cir. 2002) (obvious combination of known elements not a trade secret); Julie Research Labs., Inc. v. Select Photographic Eng’g, Inc., 998 F.2d 65, 67 (2d Cir. 1993) (particular combination of design choices not a trade secret if “obvious, widely known, easy for others to discover legitimately, or disclosed” publicly by manufacturer ).
1.1.1.2. Magnetic Attachments. The idea of using a combination of magnetic and mechanical means to attach a razor cartridge to a handle is also not secret and does not belong to Gillette. A Chinese patent published in 2009 (no. CN 101612740, or the “Jian patent”) and a United States patent published in 2000 (U.S. Patent No. 6,035,535) both disclose razors that use a combination of magnetic and mechanical engagements. Gillette cannot claim as
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confidential information that was publicly disclosed in a patent. See, e.g., Atlantic Research Mktg. Sys., Inc. v. Troy, 659 F.3d 1345, 1357 (Fed. Cir. 2011) (applying Massachusetts law).
Gillette has now conceded that the concept of using both a magnetic and a mechanical engagement is a publicly available idea or invention. It did so in a filing with the United States Patent and Trademark Office made by Gillette to challenge ShaveLogic’s patent for a razor using magnetic and mechanical engagements (U.S. Patent 8,789,282, or the “ ’282 patent”).2 Gillette made that filing in March 2016, just two months after Gillette filed its amended complaint in this case.
Whether the individual defendants knew of or relied upon the Jian patent in their work for ShaveLogic is immaterial. Gillette cannot prove that the concept of magnetic attachments was confidential if it had already been disclosed in a publicly available patent, whether or not Defendants had seen that prior patent. Gillette expressly argued to the Patent Office that the claims in ShaveLogic’s ’282 patent are not novel because the Jian patent had already made publicly available the idea that a shaving cartridge assembly can be mounted on a handled using a “magnetic and mechanical connection” between the two. Gillette’s statement to the Patent Office that this prior art was publicly available belies its unsupported claim to the contrary in this action. And Gillette’s Rule 30(b)(6) designee in this lawsuit confirmed under oath that the Jian patent discloses a means for a magnetic attachment and a mechanical attachment.
1.1.1.3. Elastomeric Pivots. Similarly, the idea of designing a shaving cartridge that pivots and is returned to its original position by
2 Gillette’s filing was a petition for Inter Partes review of ShaveLogic’s ’282 patent. An Inter Partes petition asks the Patent Office to reexamine the claims of a previously-issued patent and to determine whether any of them is invalid and should be cancelled because it is “unpatentable in light of prior art,” meaning either that the claimed invention is not novel because prior art shows that the invention was already known or used by others, or that the claimed invention is an obvious variation or combination of subject matter that was already known. Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131, 2136 (2016); see also 35 U.S.C. § 311(b) (scope of inter partes review), § 102 (requiring novelty to obtain patent), and § 103 (disqualifying patent claims that “would have been obvious … to a person having ordinary skill in the art to which the claimed invention pertains”).
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a loop with an elastomeric element is also publicly known and therefore cannot be Gillette confidential information. A company called King of Shaves received a United State patent first published in May 2005 (U.S. Patent no. 7,100,284) that disclosed the possibility of using an elastomeric loop to return a pivoting shaving cartridge to its original position. In addition, Gillette itself publicly disclosed several other ways of designing a razor that uses an elastomeric loop to return a pivoting razor cartridge to its original position. It did so in a United States patent that was first published in January 2011 (U.S. Patent 8,273,205 B2).
1.1.1.4. Source of Public Information Irrelevant. Since the general design concepts of front-loading engagements, magnetic attachments, and elastomeric pivots were not secret and did not belong to Gillette, the individual defendants were free to use those ideas even if they learned about these concepts while working for Gillette.
Although Gillette may bar a former employee from using Gillette’s confidential information against it, it “may not prevent the employee from using the skill and general knowledge acquired or improved through his employment.” Abramson v. Blackman, 340 Mass. 714, 715-16 (1960); accord, e.g., Richmond Bros., Inc. v. Westinghouse Broadcasting Co., Inc., 357 Mass. 106, 111 (1970); Woolley’s Laundry v. Silva, 304 Mass. 383, 387 (1939). Employees are free to quit their job, start working for a competitor, and use their “general knowledge, experience, memory and skill” to compete against their former employer. Dynamics Research, 9 Mass. App. Ct. at 267, quoting J. T. Healy & Son, 357 Mass. at 740; accord Club Aluminum Co. v. Young, 263 Mass. 223, 226-227 (1928).
If the individual defendants took skills they developed and public information they learned while working for Gillette, and used them to help ShaveLogic design new products to compete with Gillette, that would not constitute an unfair trade practice in violation of G.L. c. 93A as a matter of law.
1.1.2. Gillette Sketches or Models. Gillette also alleges that Defendants used Gillette confidential information that was contained in sketches, samples, or models of possible razor designs that were created at Gillette and kept by Craig Provost, John Griffin, and William Tucker when they stopped working
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there. Once again, however, the undisputed facts show that Gillette cannot prove that Defendants engaged in unfair competition by using those materials.
There is no evidence that any confidential information embodied in or discernable from those materials and items made its way into any ShaveLogic patent, patent application, or product design. Gillette concede this point at oral argument. Without evidence that any of the remaining Defendants actually used confidential Gillette information to design products for ShaveLogic, the mere fact that some of the individual defendants have Gillette materials in their possession cannot support a finding in Gillette’s favor on its claims under c. 93A.
Gillette argues that it need not show that Gillette confidential information reflected in these sketches, samples, or models became part of any ShaveLogic design, so long as it can prove that ShaveLogic could not have conceived of its patented inventions and other designs without using Gillette’s confidential information. At oral argument Gillette asserted that the expert opinion of Fred P. Smith, a mechanical engineer, provides evidence that Defendants could not possibly have come up with the razor design in ShaveLogic’s patent and patent applications without using confidential information regarding Gillette designs and prototypes found in the retained sketches, samples, and models.
This argument fails because it mischaracterizes Mr. Smith’s expert opinions. Mr. Smith states that he “was not asked to opine on what was confidential or a trade secret” but instead was told to assume that whatever information he was given by Gillette’s attorneys qualified as confidential information. He then explains his understanding that the general concepts of front-loading engagements, magnetic attachments, an elastomeric loop returns are confidential information that belong to Gillette. He also refers to some of the specific sketches or models retained by the individual defendants as examples of these general concepts. But Smith never opines that Defendants probably used confidential information contained in these sketches and models to design the ShaveLogic razors. Instead, Smith’s opinion is that Defendant could not have developed the ShaveLogic razors without using some part of all of the information he describes, including the three general concepts that were the focus of Gillette’s amended complaint.
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Mr. Smith’s opinions do not create any triable issue of fact because they are based on the mistaken assumption that the general concepts of front-loading engagements, magnetic attachments, and elastomeric returns belonged to Gillette, when in fact they were all publicly available information. At no point in Mr. Smith’s expert report does he conclude or opine that Defendants could not have developed ShaveLogic’s razor designs without using truly confidential information obtained from the sketches and models kept by the individual defendants.
Nor can Gillette salvage its c. 93A claims with evidence that an initial ShaveLogic design looks very similar to a purportedly confidential Gillette design. Gillette asserts that the initial design sketched out by ShaveLogic’s founder Robert Wilson for a razor using a magnetic attachment is very similar in appearance and functionality to a prototype design that belongs to Gillette and is shown in a sketch kept by defendant Craig Provost. This evidence cannot support Gillette’s unfair competition claims for two reasons. First, as discussed above, the idea of using magnetic attachments is public information and does not belong to Gillette. Second, the undisputed evidence shows that Wilson independently created his design in 2009 before he ever met Provost and the other individual defendants.
In sum, the summary judgment record makes clear that no reasonable fact finder could conclude that Defendants made use of any confidential information obtained from Gillette without engaging in rank speculation or conjecture. Defendants are therefore entitled to summary judgment on these claims.
1.2. Breach of Confidentiality Agreements. Gillette claims in Count II that each of the individual defendants breached contractual duties not to use or disclose Gillette’s confidential information.
Defendants are entitled to summary judgment on this claim because Gillette has mustered no evidence that any of the defendants used or disclosed any Gillette confidential information after they left Gillette to work for ShaveLogic. As explained above, Gillette cannot point to any evidence that the individual defendants used Gillette confidential information to design any product for ShaveLogic. Nor is there any evidence that the individual defendants used Gillette
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confidential information in any other way after leaving Gillette, or that they disclosed any such information to ShaveLogic.
The evidence on which Gillette relies cannot support a finding in Gillette’s favor on this contract claim. Mr. Griffin and Mr. Provost retained hard drives, documents, and razor models when they left Gillette, and Mr. Kohring retained backup copies of some old Gillette files. But no contract barred Defendants from retaining or looking at Gillette materials; their only obligation on this score was not to use or disclose Gillette confidential information. Merely possessing or even accessing arguably confidential information does not violate the parties’ contracts.
1.3. Civil Conspiracy. Gillette claims in Count IX that the remaining Defendants entered into a civil conspiracy “to misappropriate Gillette’s confidential information and trade secrets” and “to compete unfairly with Gillette.”3 This claim fails because, as explained above, there is no evidence that Defendants used any confidential information belonging to Gillette to benefit ShaveLogic.
To succeed on its claim for conspiracy, Gillette would have to prove at trial that Defendants acted together either (1) to exercise some power of coercion over the plaintiff that they would not have had if they had acted independently, or (2) pursuant to “a common plan to commit a tortious act.” Kurker v. Hill, 44 Mass. App. Ct. 184, 188-189 (1998); accord Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1563-1564 (1st Cir. 1994) (applying Massachusetts law).
Gillette alleges the second kind of civil conspiracy, involving a purportedly tortious “common plan.”
There can be no civil conspiracy of this kind without “an underlying tortious act” carried out by two or more defendants acting together. Bartle v. Berry, 80 Mass. App. Ct. 372, 383-384 (2011). “Key to this cause of action is a defendant’s substantial assistance, with the knowledge that such assistance is contributing to a common tortious plan.” Kurker, supra, at 189.
3 As noted above, the Court previously dismissed the portion of Count IX alleging a civil conspiracy to cause ShaveLogic’s general counsel to breach his fiduciary duty to Gillette.
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It is not clear that Gillette could prevail on its conspiracy claim even if it could prove its factual allegations, because neither the claimed unfair use of confidential information in violation of G.L. c. 93A nor the claimed breach of the nondisclosure agreements would constitute an underlying tortious act. See generally Kattar v. Demoulas, 433 Mass. 1, 12-13 (2000) (G.L. c. 93A creates substantive new rights by barring conduct that is neither a common law tort nor a breach of contract);4 Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365, 368 (1997) (breach of contract “is not a tort”).
Defendants would be entitled to summary judgment on this claim even assuming that the alleged misconduct could, in theory and if proved, satisfy the element of an underlying tortious act.
Gillette has no evidence that Defendants misappropriated Gillette’s confidential information or used it to compete unfairly with Gillette, as discussed above. Defendants are therefore entitled to judgment as a matter of law on the conspiracy claim. See Bartle, supra (affirming summary judgment for defendants).
1.4. Constructive Trust Remedy. Gillette claims in Count IV that the individual defendants used or disclosed Gillette confidential information for the benefit of ShaveLogic, that ShaveLogic has been unjustly enriched as a result, and that ShaveLogic’s ’282 patent and pending patent applications should therefore be subject to a constructive trust for the benefit of Gillette.
A constructive trust “is imposed ‘in order to avoid the unjust enrichment of one party at the expense of the other where the legal title to the property was
4 The Supreme Judicial Court has “classified some G.L. c. 93A claims as contract-based, others as tort-based, and still others as ‘neither wholly tortious nor wholly contractual in nature.’ ” Kraft Power Corp. v. Merrill, 464 Mass. 145, 156 (2013) (citations and footnotes omitted), quoting Kattar, 433 Mass. at 12. For example, “tort actions ‘for fraud and deceit are within the contemplation of an ‘unfair act’ under [G.L. c. 93A].’ ” Kraft Power, supra at n.16, quoting Datacomm Interface, Inc. v. Computerworld, Inc., 396 Mass. 760, 778 (1986).
Gillette has not accused Defendants of committing an unfair trade practice by engaging in fraud or any other tortious act. Although Gillette previously claimed that Defendants committed the tort of misappropriating trade secrets, it has dismissed those claims with prejudice. The allegation that Defendants used Gillette’s confidential information to benefit ShaveLogic is the kind of c. 93A claim that is neither tort-based nor contractual in nature.
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obtained by fraud or in violation of a fiduciary relation or arose where information confidentially given or acquired was used to the advantage of the recipient at the expense of the one who disclosed the information.’” Meskell v. Meskell, 355 Mass. 148, 151 (1969), quoting Barry v. Covich, 332 Mass. 338, 342 (1955).
ShaveLogic is entitled to summary judgment in its favor on this claim because Gillette has no evidence that any of its confidential information was used or disclosed for the benefit of ShaveLogic. See Northrup v. Brigham, 63 Mass. App. Ct. 362, 370 (2005) (affirming summary judgment for defendant on constructive trust claim because record showed no unjust enrichment). Gillette makes no claim that ShaveLogic obtained its patent or developed its patent applications by fraud or in violation of a fiduciary obligation.
2. ShaveLogic’s Counterclaims. Gillette is not entitled to summary judgment on ShaveLogic’s two counterclaims because a reasonable jury could conclude that Gillette deliberately asserted baseless claims against ShaveLogic in an attempt to scare off ShaveLogic’s investors and potential business partners, and thereby drive ShaveLogic out of the market for wet-shaving products.
A claim cannot be resolved on a motion for summary judgment where “a reasonable jury could return a verdict for the nonmoving party.” Dennis v. Kaskel, 79 Mass. App. Ct. 736, 741 (2011), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). For this reason, in evaluating the motion for summary judgment the Court “must … draw all reasonable inferences” from the evidence presented “in favor of the nonmoving party,” as a jury would be free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). A request for summary judgment must be denied where a claim turns on disputed issues of fact or on disputed inferences from admitted facts. See Molly A. v. Commissioner of Dept. of Mental Retardation, 69 Mass. App. Ct. 267, 284 (2007) (“summary judgment cannot be granted if the evidence properly before the motion judge reveals a genuine issue of disputed material fact”); Flesner v. Technical Communications Corp., 410 Mass. 805, 811-812 (1991) (“Where a jury can draw opposite inferences from the evidence, summary judgment is improper.”).
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2.1. Intentional Interference with Advantageous Relations. In its first counterclaim, ShaveLogic alleges that Gillette intentionally interfered with ShaveLogic’s relationships with investors and marketing and distribution companies for improper anti-competitive purposes and by improper means. Specifically, ShaveLogic claims that Gillette tortiously interfered with those relationships by threatening to bring and then filing a baseless lawsuit in an attempt to prevent ShaveLogic from entering the wet-shaving market.
To make out its claim for tortious interference with advantageous relations, ShaveLogic will have to prove that:
(1) [it] had an advantageous relationship with a third party (e.g., a present or prospective contract or employment relationship); (2) the defendant knowingly induced a breaking of the relationship; (3) the defendant’s interference with the relationship, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant’s actions.
Blackstone v. Cashman, 448 Mass. 255, 260 (2007).
Gillette argues that ShaveLogic cannot establish that Gillette intentionally interfered with any advantageous relationship. Specifically, Gillette asserts that there is no evidence that it was aware of any particular relationship between ShaveLogic and some third party or that Gillette did anything that in fact interfered with that relationship. These arguments are without merit.
A reasonable jury could find that Gillette knew that a new entrant to the market would need to establish relationships with manufacturing and distribution partners, that Gillette intended to interfere with ShaveLogic’s ability to form those relationships by bringing a baseless lawsuit, that Gillette succeeded in scaring off potential manufacturing and distribution partners from working with ShaveLogic, and that ShaveLogic suffered economic harm as a result. It would certainly be a permissible inference that Gillette was unhappy with ShaveLogic’s plans to market a competing razor and wanted to find a way to prevent ShaveLogic from consummating relationships with companies that could manufacture or distribute products for ShaveLogic. Indeed, Gillette complains in its complaint that ShaveLogic “actively leveraged” its relationships with former Gillette employees “to develop relations” with potential business and manufacturing partners and that
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Gillette was purportedly harmed by these attempts “to commercialize wet-shaving products for ShaveLogic.”
Gillette’s insistence that ShaveLogic must present direct evidence that Gillette knew that particular manufacturers or distributors were exploring business relationships with ShaveLogic is without merit. A party claiming tortious interference with prospective (rather than existing) business relationships is not required to prove that the defendant was aware of a potential relationship with a specific third party. It is enough that the defendant knowingly interfered with a prospective relationship between the plaintiff and an identifiable class or category of third persons. Dube v. Likins, 167 P.3d 93, 101 (Ariz. App. 2007); Downer’s Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 546 N.E.2d 33, 37 (Ill. App. 1989); Jae Enterprises, Inc. v. Oxgord, Inc., no. 5:15-CV-228-TBR, 2016 WL 865328, *12 (W.D. Kentucky 2016) (applying Kentucky law); Lucas v. Monroe County, 203 F.3d 964, 979 (6th Cir. 2000) (applying Michigan law); McDonald Apiary, LLC v. Starrh Bees, Inc., no. 8:14-CV-351, 2015 WL 11108873, *3 (D.Neb. 2015) (applying Nebraska law); Hayes v. Northern Hills General Hosp., 590 N.W.2d 243, 249-250 (S.D. 1999); Trau-Med of America, Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701 (Tenn. 2002).
2.2. Violation of G.L. c. 93A. In its second counterclaim, ShaveLogic asserts that the same alleged misconduct by Gillette, in purportedly threatening to bring and then filing a baseless lawsuit in an attempt to prevent ShaveLogic from entering the wet shaving market, constitutes an unfair trade practice that violates G.L. c. 93A, §§ 2 and 11.
Gillette argues that this claim fails because ShaveLogic has no direct evidence that Gillette knew its claims were baseless when it filed suit. This argument is also without merit.
“There is no need to prove actual knowledge” through direct evidence; “it may be inferred from the circumstances.” Commonwealth v. Aponte, 71 Mass. App. Ct. 758, 762 (2008). And “the inferences drawn by a jury from the relevant evidence ‘need only be reasonable and possible and need not be necessary or inescapable.’ ”
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Commonwealth v. Sullivan, 469 Mass. 621, 624 (2014), quoting Commonwealth v. Casale, 381 Mass. 167, 173 (1980).
A reasonable fact finder could infer that Gillette deliberately brought baseless claims against ShaveLogic in order to interfere with prospective business relationships. It could draw such an inference from the facts that Gillette: asserted but then dismissed trade secret claims; is unable to present any evidence that Defendants misused Gillette’s confidential information; claimed in this litigation that Gillette owns the concept of magnetic attachments, but argued to the United States Patent Office that this concept was publicly known; claimed that widely-known design concepts belong to Gillette but then conceded that was incorrect. As a result, Gillette is not entitled to summary judgment on ShaveLogic’s claim under c. 93A. See G.S. Enterprises, Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 276 (1991) (reversing summary judgment for defendant on similar claim).
There is also no merit to Gillette’s further assertion that it cannot be held liable under c. 93A because it had no direct commercial relationship with ShaveLogic. A claimant can prove that a defendant’s alleged malfeasance took place in a business context, and thus implicates c. 93A, by showing either “that the defendant had a commercial relationship with the plaintiffs or that the defendant’s actions interfered with ‘trade or commerce’ ” in some other way. See First Enterprises, Ltd. v. Cooper, 425 Mass. 344, 347 (1997). “Parties need not be in privity for their actions to come within the reach of c. 93A.” Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. 53, 60 (2002), quoting Kattar, 433 Mass. at 14–15. For example, a lawyer can be sued under c. 93A for knowingly or recklessly conveying false information in order to help a client bring about a commercial transaction with a third party. See, e.g., Kirkland Const. Co. v. James, 39 Mass. App. Ct. 559, 563-564 (1995) (reversing dismissal of 93A claim against lawyers who conveyed alleged misrepresentation by client and thereby allegedly induced plaintiff to contract with client). It follows that knowingly conveying false information by bringing a baseless lawsuit to interfere with prospective commercial transactions also violates c. 93A.
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It is true that the mere filing or a lawsuit or conduct of litigation does not, in and of itself, constitute trade or commerce within the meaning of c. 93A. See, e.g., Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 564 (2008); Morrison v. Toys “R” Us, Inc., 441 Mass. 451, 457 (2004); First Enterprises, 425 Mass. at 347.
But “each case requires examination of its own circumstances to determine whether it arose in a ‘business context.’ ” Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 24 (1997) (holding defendant’s status as charitable corporation not dispositive of whether c. 93A applies), quoting Planned Parenthood Fed’n of America, Inc. v. Problem Pregnancy of Worcester, Inc., 398 Mass. 480, 493 (1986).
A reasonable fact finder could conclude that Gillette was acting in a business context because it brought a baseless lawsuit in an attempt to keep ShaveLogic from entering the wet-shaving market. Such conduct, if proved at trial, would constitute an unfair trade practice in violation of c. 93A. See G.S. Enterprises, 410 Mass. at 273-274, 277 (bringing baseless lawsuit in order to block purchase of property would violate G.L. c. 93A, §§ 2(a) and 11; reversing grant of summary judgment in favor of defendant); Brooks Automation, Inc. v. Blueshift Technologies, Inc., Suffolk Sup. Ct. 05-3973-BLS2, 20 Mass. L. Rptr. 541, 2006 WL 307848 (2006) (Gants, J.) (filing frivolous complaint “becomes an act done in the conduct of trade or commerce when, as here, it is motivated by an intent to interfere with a competitor’s contractual relationship with a key and much coveted customer”), aff’d, 69 Mass. App. Ct. 1107 (2007) (unpublished).
2.3. Litigation Privilege. Gillette argues that the conduct giving rise to ShaveLogic’s counterclaims is absolutely protected by the common law privilege for statements made during a judicial proceeding or in connection with a contemplated lawsuit. Cf. Correllas v. Viveiros, 410 Mass. 314, 320 (1991); Sriberg v. Raymond, 370 Mass. 105, 108-109 (1976).
Gillette made the same litigation privilege argument when it moved to dismiss ShaveLogic’s counterclaims earlier in the case. The court (Sanders, J.) rejected that argument when it denied Gillette’s motion to dismiss the counterclaims. Judge Sanders held that the “conduct of filing (and threatening to file) a baseless lawsuit” is not protected by the litigation privilege. Gillette appealed.
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The Appeals Court recently affirmed that ruling, holding that the litigation privilege does not require dismissal of ShaveLogic’s counterclaims because they are based on “Gillette’s purported acts of sending letters threatening a baseless lawsuit with the knowledge that ShaveLogic would have to disclose them to potential partners and investors, and then actually filing a baseless lawsuit[].”The Gillette Co. v. Provost, 91 Mass. App. Ct. 133, 141 (2017). It explained “that statements preliminary to litigation are only privileged if they ‘relat[e] to a proceeding [that] is contemplated in good faith[].” Id. at 142, quoting Sriberg, supra, at 109.
The Appeals Court’s decision disposes of Gillette’s invocation of the litigation privilege. For the reasons stated above, the summary judgment record demonstrates that ShaveLogic will be able to present evidence that would allow a reasonable jury to conclude that Gillette’s threats to sue ShaveLogic and its actual conduct in bringing and prosecuting this lawsuit were not made in good faith, because Gillette knew or should have known that it could not prove any of its claims. As a result, the litigation privilege does not bar ShaveLogic’s counterclaims.
2.4. Anti-SLAPP Arguments. Finally, Gillette also argues that ShaveLogic’s counterclaims must be dismissed under G.L. c. 231, § 59H, the so-called anti-SLAPP (strategic lawsuits against public participation) statute.
Once again, Judge Sanders already considered and rejected this argument when she denied Gillette’s motion to dismiss the counterclaims. And, once again, the Appeals Court affirmed that ruling. It held that Gillette was not entitled to dismissal under the anti-SLAPP statute because ShaveLogic “met its burden of showing that Gillette’s petitioning activity was ‘devoid of any reasonable factual support’ and caused ShaveLogic ‘actual injury.’ ” Gillette v. Provost, 91 Mass. App. Ct. at 134, quoting § 59H..
There is no reason to revisit this issue. The summary judgment record confirms the prior conclusions by Judge Sanders and the Appeals Court that Gillette’s claims are devoid of any factual support. As discussed above, the summary judgment record confirms that the general concepts of using magnetic attachments, front-loading engagements, and elastomeric pivots and returns in shaving razors have all been publicly known for a long time. Gillette has been unable to muster any
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evidence that ShaveLogic used any Gillette confidential information in developing its product. And the summary judgment also confirms that ShaveLogic has evidence that if suffered actual injury as a result of Gillette’s actions in filing and pursuing this baseless lawsuit. The anti-SLAPP statute therefore does not apply.
The Court would exercise its discretion not to reconsider Judge Sander’s denial of the anti-SLAPP motion to dismiss even Judge Sanders and the Appeals Court had not already addressed the issue. A special motion to dismiss may be filed as of right under the anti-SLAPP statute within 60 days of the service of the challenged claims. See G.L. c. 231, § 59H. A court has discretion to allow such a motion to be filed “at any later time upon terms it deems proper,” but is not required to do so. Id. Thus, “[t]he anti-SLAPP statute contemplates that, ordinarily, a special motion to dismiss is to be brought within sixty days of the service of the complaint[.]” Burley v. Comets Cmty. Youth Ctr., Inc., 75 Mass. App. Ct. 818, 822 (2009). Gillette has no right to assert or reassert an anti-SLAPP defense in a motion for summary judgment brought after the close of discovery, and far more than sixty days after ShaveLogic asserted its counterclaims.
ORDER
Defendants’ motion for summary judgment as to Plaintiff’s claims against them is ALLOWED. Plaintiff’s cross-motion for summary judgment as to Defendants’ counterclaims is DENIED.
A final pre-trial conference will be held on May 23, 2017, at 2:00 p.m. to discuss resolution of ShaveLogic’s counterclaims against Gillette, which are the only claims that remain in the case.
April 18, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 5:48 am

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Wright, et al. v. Balise Motor Sales Company, et al. (Lawyers Weekly No. 12-042-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1684CV03477-BLS2
____________________
DEREK WRIGHT and NATHANIEL TOWSE, on behalf of themselves and all others similarly situated
v.
BALISE MOTOR SALES COMPANY and Others1
____________________
MEMORANDUM AND ORDER ON DEFENDANTS’ PARTIAL MOTION TO DISMISS AND MOTION FOR A MORE DEFINITE STATEMENT
Derek Wright previously sold cars at Balise Hyundai in Hyannis, Massachusetts, for Cape Hy, Inc. Nathaniel Towse sold cars in West Springfield, Massachusetts for Balise Motor Sales Company. Wright and Towse claim that they are owed unpaid overtime, Sunday premium pay, and minimum wages. They assert a variety of statutory claims as well as common law claims for breach of contract and unjust enrichment or quantum meruit. They seek to assert the same claims on behalf of a putative class of similarly situated salespeople.
Defendants have moved to dismiss the four common law claims and to compel a more definite statement as to the scope of the putative class. The Court will allow the partial motion to dismiss but deny the motion for a more definite statement.
The Court concludes that Defendants are entitled to dismissal of the common law claims because the facts alleged in the complaint do not plausibly suggest that Defendants entered into an implied contract to pay hourly wages of any kind. Instead, the complaint indicates that the parties understood that all salespeople would be paid commissions only. The existence of an implied contract to pay commissions bars Plaintiffs’ claims for unjust enrichment or quantum meruit.
1. Motion to Dismiss. To survive a motion to dismiss under Mass. R. Civ. P. 12(b)(6), a complaint must allege facts that, if true, would “plausibly suggest[] … an entitlement to relief.” Lopez v. Commonwealth, 463 Mass. 696, 701 (2012), quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). For the purpose of deciding the pending motion
1 Cape Hy, Inc.; James E. Balise, Jr.; William Peffer; Steven M. Mitus; and Allen Thomalla.
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to dismiss, the Court must assume that the factual allegations in the complaint and any reasonable inferences that may be drawn in Plaintiffs’ favor from the facts alleged are true. See Golchin v. Liberty Mut. Ins. Co., 460 Mass. 222, 223 (2011). In so doing, however, it 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).
1.1. Implied Contract Claim. In Count VI, Plaintiffs claim that Defendants breach an implied contract with Plaintiffs by failing to pay them an amount at least equal to Plaintiffs’ statutory entitlement to a lawful minimum wage for all the hours they worked plus time-and-a-half for any hours they worked on Sundays and for any overtime they worked in excess of forty hours per week.
“In the absence of an express agreement, a contract implied in fact may be found to exist from the conduct and relations of the parties.” Sullivan v. O’Connor, 81 Mass. App. Ct. 200, 212 (2012), quoting LiDonni, Inc. v. Hart, 355 Mass. 580, 583 (1969).
The facts alleged in the complaint would support a finding that Plaintiffs had an implied contract with the corporate defendants, but do not plausibly suggest that Defendants had impliedly agreed to pay amounts equal to the minimum hourly wage, overtime, and Sunday pay required by statute. To the contrary, the complaint alleges Defendants had a policy of paying salespeople “based solely on commissions that they earned from selling vehicles” and not paying any additional amounts if needed to compensate salespeople for overtime, Sunday pay, or a minimum hourly wage. According to the complaint, Defendants paid salespeople a weekly draw, with the understanding that any amounts paid through the draw would be deducted from future commissions earned on sales. The course of conduct alleged in the complaint may have violated statutory pay requirements, as Plaintiffs claim in Counts I through V. But a policy and practice of paying commissions only, and never compensating salespeople on an hourly basis, cannot give rise to an implied contract to hourly wages that meet certain standards.
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Since the facts alleged do not plausibly suggest that Defendants had implicitly agreed through their conduct to pay Plaintiffs on an hourly basis, the implied contract claim must be dismissed.
1.2. Implied Covenant of Good Faith and Fair Dealing. In Count IX, Plaintiffs claim that Defendants breached the implied covenant of good faith and fair dealing. Under Massachusetts law, this covenant “is implied in every contract.” See Weifer v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014), quoting Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004).
This claim adds nothing to Plaintiffs’ other contract claim. 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).
Since the implied contract alleged in the complaint was to pay sales commissions, not to pay any kind of hourly wages, nothing in the implied covenant would require Defendants to pay hourly wages for overtime, time worked on Sundays, or as a minimum hourly wage. See Boston Med. Ctr., supra, at 459-460 (where plaintiff hospitals agreed in their contract to accept certain rates of payment for serving Medicaid patients, “the Secretary cannot be found to have acted in bad faith or to have dealt unfairly by failing to provide reimbursement at higher rates”).
1.3. Unjust Enrichment and Quantum Meruit. There is no need to analyze Plaintiffs’ quantum meruit and unjust enrichment claims separately, as these claims are essentially indistinguishable. “The underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust enrichment of one party and unjust detriment to the other party.” Liss v. Studeny, 450 Mass. 473, 479 (2008), quoting Salamon v. Terra, 394 Mass. 857, 859 (1985).
The facts alleged in the complaint establish that Plaintiffs cannot recover a minimum wage, overtime, or Sunday premium pay on a quantum meruit or unjust
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enrichment theory because they were employed under an implied contract that governed their compensation and did not provide for such wages.
“A plaintiff is not entitled to recovery on a theory of quantum meruit [or unjust enrichment] where there is a valid contract that defines the obligations of the parties.” Boston Med. Ctr. Corp. v. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 467 (2012) (affirming dismissal on this ground). “A valid contract defines the obligations of the parties as to matters within its scope, displacing to that extent any inquiry into unjust enrichment.” Id., quoting Restatement (Third) of Restitution and Unjust Enrichment § 2 (2011); see also Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005) (“An equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law.”).
2. Motion for a More Definite Statement. There is no need to order Plaintiffs to provide a more definite statement. The complaint makes clear that Plaintiffs are asserting claims in part on behalf of other salespeople who were paid commissions and not paid on an hourly basis. These allegations are detailed enough for Defendants to understand and respond to the complaint. More detail can wait until after Plaintiffs have had a chance to conduct discovery.
ORDER
Defendants’ motion to dismiss the contract and equitable claims in Counts VI through IX of the complaint is ALLOWED. Defendant’s motion for a more definite statement is DENIED.
April 18, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 27, 2017 at 2:13 am

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Mirra, et al. v. Mirra, et al. (Lawyers Weekly No. 12-044-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1484CV03857-BLS2
____________________
LEONARD MIRRA and SANDRA CAPO, individually and derivatively on behalf of MIRRA CO., INC.
v.
NORINO MIRRA; MIRRA CO., INC.; CHRISTOPHER MIRRA; NATALIE WRIGHT; and ANTHONY MIRRA, JR.
____________________
MEMORANDUM AND ORDER ALLOWING MOTION BY NORINO MIRRA AND MIRRA CO. TO COMPEL PRODUCTION OF DOCUMENTS
This lawsuit concerns a dispute among shareholders in a closely-held corporation known as Mirra Co., Inc. Plaintiffs Leonard Mirra (known as Lenny) and his sister Sandra Capo are minority shareholders. Their brother Anthony Mirra, Jr., is also a minority shareholder; he is named as a defendant only because he is a necessary party with respect to Plaintiffs’ claim challenging purported transfers of stock from Norino Mirra to his children Christopher Mirra and Natalie Wright.
Defendants Norino Mirra and Mirra Co. have moved to compel production of 44 emails among Lenny, Sandra, their lawyer at Posternak Blankstein & Lund, and Anthony. Defendants argue that these emails are not privileged because they were shared with Anthony, who is not represented by Posternak. Plaintiffs argue that the emails are privileged because Anthony had and still has an implied attorney-client relationship with Posternak.
The Court will ALLOW the motion to compel because it concludes, based on Anthony’s sworn deposition testimony, that Anthony never had any kind of attorney-client relationship with Posternak. Absent such a relationship, any privilege in the disputed emails was waived when Plaintiffs voluntarily shared them with Anthony. In re Adoption of Sherry, 435 Mass. 331, 336 (2001).
As the party asserting the attorney-client privilege, Plaintiffs have “the burden of establishing that the privilege applies to the communications at issue.” Clair v. Clair, 464 Mass. 205, 215 (2013). “Generally, the attorney-client privilege protects only ‘confidential communications between a client and its attorney undertaken for the purpose of obtaining legal advice.’ ” DaRosa v. City of New Bedford, 471 Mass.
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446, 463 (2015), quoting Suffolk Constr. Co. v. Division of Capital Asset Mgmt., 449 Mass. 444, 448 (2007).
It is undisputed that Anthony never had any express attorney-client relationship with Posternak. In 2010 Lenny, Sandra, and Anthony all met with Attorney Nicholas Nesgos of Posternak to discuss ongoing disputes with the majority shareholders in Mirra Co. (Defendants do not seek disclosure of anything said at that meeting.) Thereafter Lenny and Sandra hired Posternak to represent them. Anthony did not. He never signed an engagement letter with Posternak, never paid Posternak any money, never asked Posternak to represent him, and was never told that Posternak or Attorney Negros was representing him.
Plaintiffs insist that Anthony nonetheless had an implied attorney-client relationship with Posternak. In an interesting twist, Anthony does not join in that argument and does not oppose the motion to compel production of emails he received or sent.
“An attorney-client relationship may be implied ‘when (1) a person seeks advice or assistance from an attorney, (2) the advice or assistance sought pertains to matters within the attorney’s professional competence, and (3) the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance.’ ” DaRoza v. Arter, 416 Mass. 377, 381 (1993), quoting DeVaux v. American Home Assurance Co., 387 Mass. 814, 817-818 (1983). “All three requirements of this test must be met to establish the relationship.” Id.
Plaintiffs’ claim that Anthony had an implied attorney-client relationship with Posternak fails to meet the first requirement, because Plaintiffs have not convincingly demonstrated that Anthony ever sought advice or assistance from Attorney Nesgos. The Court credits Anthony’s sworn deposition testimony that he never asked Nesgos to provide him with any legal advice. It follows that “[n]o implied attorney-client relationship came into existence.” DaRoza, supra, at 382. Even if Anthony somehow relied upon Posternak to protect his interests, that would not establish an implied attorney-client relationship in the absence of credible evidence that Anthony actively sought Posternak’s advice or assistance. See Fanaras Enterprises, Inc. v. Doane, 423 Mass. 121, 125 (1996).
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Plaintiffs have muddied the waters by submitting an affidavit in which Anthony says, contrary to his deposition testimony, that “I went to the meetings with Attorney Nesgos because my brother and sister asked me to go and because I wanted to receive legal advice from Attorney Nesgos about our rights as minority shareholders.”
If the Court were considering a motion for summary judgment, it would have to disregard Anthony’s affidavit to the extent that it contradicts his prior, sworn deposition testimony. See York v. Zurich Scudder Investments, Inc., 66 Mass. App. Ct. 610, 611 (2006) (“a party cannot create a disputed issue of fact by the expedient of contradicting by affidavit statements previously made under oath at a deposition” (quoting O’Brien v. Analog Devices, Inc., 34 Mass. App. Ct. 905, 906 (1993)).
In this context, the Court must decide whether it believes the testimony Anthony gave at his deposition in October 2016 or the materially different statement Anthony endorsed by signing his affidavit in March 2017.
The Court is not required to believe everything Anthony says in his affidavit. 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).
In the exercise of its discretion, the Court credits Anthony’s deposition testimony that he never sought any legal advice from Attorney Nesgos; it does not credit the contrary statement in Anthony’s affidavit that, on second thought, he did seek legal advice from Nesgos. The deposition testimony is more credible because there is no evidence other than the affidavit to corroborate Anthony’s sudden change of heart. To the contrary, there is evidence that in January 2012 Mr. Nesgos told the opposing lawyer, who was representing Norino and his brother Ralph Mirra, that Nesgos did not represent Anthony. The fact that Anthony does not oppose the motion to compel, and has no problem with Defendants seeing the emails he sent or received, shows that Anthony does not consider these emails to be privileged and weighs
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heavily against Plaintiffs’ contention that Anthony had been seeking advice from Posternak or considered Negros to be his lawyer. It is understandable that Anthony would want to support his siblings and sign an affidavit that apparently was put together by their lawyer. But the Court does not believe and therefore gives no weight to this part of Anthony’s affidavit.
Lenny and Sandra were free to take private email communications they were having with their lawyer and share them with Anthony. In so doing, however, they waived the attorney-client privilege.
ORDER
The motion by Defendants Norino Mirra and Mirra Co., Inc., to compel the production of 44 emails that were sent to or received from Anthony Mirra, and that Plaintiffs claim are privileged, is ALLOWED. Plaintiffs shall produce these emails forthwith.
25 April 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 26, 2017 at 10:38 pm

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Suffolk Construction Company, Inc. v. Benchmark Mechanical Systems, Inc., et al. (Lawyers Weekly No. 12-045-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1384CV01463-BLS2
____________________
SUFFOLK CONSTRUCTION COMPANY, INC.
v.
BENCHMARK MECHANICAL SYSTEMS, INC. and READING CO-OPERATIVE BANK
____________________
MEMORANDUM AND ORDER ALLOWING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
This case arises from Suffolk Construction Company’s mistaken payment of monies to Benchmark Mechanical Systems rather than to Benchmark’s lender, Reading Co-Operative Bank. Suffolk had hired Benchmark as a subcontractor on a large construction project. Benchmark secured a line of credit by assigning to the Bank all money that Benchmark stood to collect from Suffolk under its subcontract. Suffolk mistakenly made payments totaling $ 3,822,500.49 to Benchmark instead of to the Bank. Benchmark held and spent those monies, rather than forward them to the Bank. After Benchmark went out of business, the Bank sued Suffolk. The Supreme Judicial Court ordered Suffolk to pay the Bank the full amount it should have paid under Benchmark’s assignment. See Reading Co-Operative Bank v. Suffolk Constr. Co., 464 Mass. 543, 557 (2013). With statutory interest included, Suffolk paid the Bank a judgment totaling $ 7,640,907.45.
Suffolk brought this action seeking to recover the surplus held by the Bank that was left after the Bank deducted its reasonable costs of collection and the principal and interest owed by Benchmark from the amount paid by Suffolk. In addition, Suffolk asserted common law claims against Benchmark seeking to recover the $ 3,822,500.49 in subcontract payments that Suffolk was compelled to pay a second time to the Bank. The Supreme Judicial Court recently held that Suffolk had stated viable claims against the Bank, but that its claims against Benchmark are barred by the applicable statute of limitations. See Suffolk Constr. Co. v. Benchmark Mechanical Systems, Inc., 475 Mass. 150 (2016).
Suffolk now moves for summary judgment as to its right to collect the surplus of roughly $ 1.35 million being held by the Bank. The Court will ALLOW this motion.
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This resolves all remaining claims. Suffolk and the Bank report that they have settled Suffolk’s claim that the Bank’s costs of collection were unreasonable, and that this settlement will take effect if the Court were to rule (as it does) that Suffolk is entitled to receive the full surplus amount that the Bank owes to Benchmark.
The SJC has held that under the circumstances of this case Suffolk is entitled to equitable subrogation as against Benchmark, meaning that it may “stand in Benchmark’s shoes as to the surplus” held by the Bank. Suffolk Constr., 475 Mass. at 156. This holding is the law of the case, is binding on all parties, and may not be reconsidered now that the case has been remanded to the Superior Court. See City Coal Co. of Springfield, Inc. v. Noonan, 434 Mass. 709, 712 (2001).1 It necessarily follows that Suffolk is therefore the “debtor” for purposes of G.L. c. 106, § 9-608(a)(4), and thus by law is entitled the full amount of the surplus held by the Bank. See Suffolk Constr., 475 Mass. at 155-156. Suffolk’s alternative theories as to why it is entitled to recover the surplus are therefore moot.
Benchmark’s claim that Suffolk owes it $ 964,642.51 for change orders that Benchmark carried out on the project, and that Benchmark should be able to recoup this amount from the surplus held by the Bank, is without merit. The summary judgment record demonstrates that the Bank, as Benchmark’s assignee, settled and resolved these claims against Suffolk. In exchange for a $ 35,000 payment by Suffolk, the Bank (acting as Benchmark’s assignee) executed a settlement agreement providing that this payment “constitutes full and final satisfaction, discharge and payment for any monies owed to Benchmark by Suffolk. The settlement agreement also expressly released “any rights Benchmark may have against Suffolk” arising out of or with respect to any work by Benchmark for Suffolk on this project. This release and settlement agreement did more than merely extinguish any right by Benchmark
1 The Court recognizes that an issue decided on appeal may be reopened by a trial judge after remand “if the evidence on a subsequent trial was substantially different, controlling authority has since made a contrary decision of the law applicable to such issues, or the decision was clearly erroneous and would work a manifest injustice.” Kitras v. Town of Aquinnah, 474 Mass. 132, 146 (2016), quoting King v. Driscoll, 424 Mass. 1, 8 (1996), quoting in turn United States v. Rivera-Martinez, 931 F.2d 148, 151 (1st Cir.), cert. denied, 502 U.S. 862 (1991). None of these circumstances is present here, however.
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to assert a claim directly against Suffolk for further payment; it also extinguished any debt owed to Benchmark by Suffolk.
ORDER
Plaintiff’s motion for summary judgment on the remaining claims is ALLOWED. Final judgment shall enter: (1) in favor of Suffolk Construction Company, Inc., on Counts VII and XI of its amended complaint by (a) Declaring that Suffolk is the equitable subrogee of Benchmark Mechanical Systems, Inc., with respect to the surplus remaining after Reading Co-Operative Bank applied Suffolk’s judgment payment to Benchmark’s outstanding debt to the bank, Suffolk is therefore the “debtor” for purposes of G.L. c. 106, § 9-608(a)(4), and Suffolk is entitled to recover the full amount of that surplus held by the Bank, and (b) Ordering Reading Co-Operative Bank to pay the full amount of that surplus to Suffolk Construction Company, Inc., forthwith; and (2) Dismissing all other remaining claims, counterclaims, and cross-claims with prejudice.
25 April 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 26, 2017 at 7:04 pm

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CareOne Management, LLC, et al. v. NaviSite, Inc. (Lawyers Weekly No. 12-043-17)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT.
1484CV00378-BLS2
1484CV00858-BLS2
____________________
CAREONE MANAGEMENT, LLC and PARTNERS PHARMACY SERVICES, LLC
v.
NAVISITE, INC
CONSOLIDATED WITH
NAVISITE, INC
v.
CAREONE MANAGEMENT, LLC and PARTNERS PHARMACY SERVICES
____________________
MEMORANDUM AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
These consolidated lawsuits arise from the agreement by NaviSite, Inc., to develop and provide information technology services to CareOne Management, LLC and its affiliate Partners Pharmacy Services, LLC. NaviSite first contracted to provide an array of computerized services to CareOne. Several months later NaviSite contracted to provide a much more limited set of information technology services to Partners. After difficulties and disputes regarding implementation of its contract with CareOne, NaviSite threatened to and then did terminate both contracts.
CareOne and Partners asserted various claims against NaviSite, which in turn sued CareOne. (NaviSite also sued Partners, but Judge Sanders dismissed those claims.) NaviSite and CareOne both move for summary judgment; NaviSite does so on all claims while CareOne’s motion is limited to NaviSite’s claims against it.
The Court concludes that CareOne is entitled to summary judgment on the claims asserted against it by NaviSite, and that NaviSite is entitled to summary judgment on all claims asserted against it by CareOne and Partners. Final judgment will enter declaring the rights of the parties, with respect to the issues in controversy that CareOne and Partners identified in their claim for declaratory judgment, and dismissing all other claims with prejudice.
1. Background.
1.1. Undisputed Material Facts. The following are undisputed facts, as demonstrated in the evidentiary materials submitted by the parties or reasonable
inferences that one could draw from those facts. The Court “must … draw all reasonable inferences” from the evidence presented “in favor of the nonmoving party,” as a jury or judicial fact finder would be free to do at trial. Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). It has done so.
CareOne manages dozens of nursing homes. Partners operates commercial pharmacies that serve patients at more than 500 nursing homes, including those run by CareOne. These two companies are separate legal entities, though both were founded and are run by the same person.
CareOne retained NaviSite in September 2012 to develop, implement, host, and operate new computing services to be used at all of CareOne’s nursing facilities. The system design was to include “virtual desktops” through which CareOne employees could access programs, applications, and data that NaviSite would host on servers located at its facilities. It also included other computer services that would be implemented and hosted by NaviSite. NaviSite agreed that it would transition CareOne from its current IT vendor and begin providing the agreed upon services using NaviSite’s servers no later than January 1, 2013. The parties also agreed that CareOne would pay NaviSite certain upfront fees, but that the majority of the fees were to be billed and paid on a monthly basis for each component service after CareOne accepted delivery of that service. CareOne paid NaviSite roughly $ 580,000 in upfront charges upon signing of the parties’ contract.
The contract between CareOne and NaviSite consists of a number of interrelated documents that were executed at the same time. These parties executed a Master Statement of Work (“SOW”) that described many of the services that NaviSite agreed to provide through a “Third Party Provider.” They also executed a Master Services Agreement” (“MSA”). The SOW provided that it “is governed by and incorporates by reference, the terms and conditions of the” MSA. And these parties executed three detailed “Schedules” providing that NaviSite would provide CareOne with managed hosting services, managed messaging services, and cloud-enabled desktop as a service. These Schedules state that they are incorporated into and part of the MSA. Finally, at the same time these parties executed two sales orders in which
CareOne agreed to pay certain one-time and monthly fees for the managed hosting services. The sales orders state that they are subject to the terms of the MSA.
In November 2012 and December 2012 CareOne and NaviSite executed three more sales orders for email services and for the migration of CareOne’s existing email and SharePoint systems to NaviSite’s servers. These sales orders all state that they are subject to the terms of the MSA.
Separately, in November 2012 Partners and NaviSite executed a sales order for a Citrix production environment. This sales order originally designated CareOne as the purchaser, but it was revised by hand to change the purchaser to Partners. This sales order contains the same language as the others stating that it is subject to the terms and conditions of the MSA between CareOne and NaviSite. Partners admits, in the statement of facts regarding Partners’ claims, that by executing this sales order Partners “consented to the standard terms and conditions in the NaviSite/CareOne Master Services Agreement … as they pertained to Partners … as the ‘Customer’ .”
NaviSite’s work for Partners went fine. NaviSite delivered the implemented the promised services. Partners paid all required up-front fees and was paying all the agreed upon monthly fees.
In contrast, NaviSite’s work for CareOne went poorly. The SOW between these parties provided that NaviSite was to begin hosting and providing CareOne’s computer services no later than January 1, 2013. That did not happen. Implementation of the promised services was repeatedly delayed. Who caused or was responsible for the delays is in dispute. NaviSite blames CareOne and vice versa.
On January 31, 2013—one month after the due date—NaviSite sent an email asking CareOne to accept four of the promised systems. CareOne responded immediately, stating it “cannot accept this environment in its current state” because the computer systems were purportedly incomplete, had not been fully tested, and could not be used by CareOne. As a result CareOne refused to pay NaviSite’s first monthly invoice for January 2013.
NaviSite never sent CareOne any other notice stating that any part of the project was complete and ready for acceptance by CareOne. In April, June, and
August 2013 NaviSite made available test versions of many but not all of the services it had contracted to provide. CareOne informed NaviSite that it had discovered material problems with all of them. CareOne never accepted any of those services and never used them for any purpose other than acceptance testing.
After CareOne refused to pay the January 2013 invoice and rejected the first four services, the parties had further discussions about what it would take for NaviSite to finish implementing the project. CareOne and NaviSite negotiated the only amendment to their contract, which they executed on February 28, 2013. The amendment was called Amendment Number One to the MSA.
The Amendment provided as follows. CareOne agreed to pay NaviSite’s first monthly invoice, for the month of January 2013, by March 31, 2013. In turn, NaviSite agreed that CareOne would receive a credit of twice that amount that would be applied against CareOne’s monthly invoices in months 34, 35, and 36 of the MSA’s term. NaviSite also agreed to deliver an Active Directory Synchronization solution to CareOne by March 3, 2013. The Amendment stated that all terms and conditions of the MSA remained in effect except as otherwise provided in the Amendment.
CareOne paid NaviSite’s monthly invoice for January 2013 as agreed in Amendment Number One; that payment was in the amount of $ 365,169.30. CareOne also paid NaviSite’s invoices for February, March, and April 2013; the payments for those three invoices totaled just over $ 2 million,1 which means that CareOne paid some $ 2.4 million to NaviSite for these four monthly invoices. Thus, including the roughly $ 580,000 in upfront payments made when the contract was first executed, CareOne has paid NaviSite almost $ 3 million.
NaviSite submitted invoices for later months, but CareOne did not pay them. NaviSite was aware that CareOne refused to pay and was disputing the invoices issued after April 2013 because CareOne had still not received or accepted the services that CareOne was billing for.2
1 The summary judgment record shows that CareOne paid $ 587,894 on March 7, 2013, $ 725,438.60 on June 10, 2013, and $ 730,338.60 on June 21, 2013. This is more than what CareOne alleged in ¶ 102 of its amended complaint.
2 NaviSite’s understanding of these facts is confirmed in an internal email circulated within NaviSite on September 5, 2013.
In November 2013 CareOne informed NaviSite that it intended to terminate their Agreement for non-performance and sought to negotiate an orderly transition. NaviSite responded five days later by demanding $ 2.2 million as payment for its monthly invoices for April through September 2013. NaviSite said that if it did not receive payment of that amount within five days it would terminate all services it was providing to Partners.
After Partners successfully migrated its services from NaviSite to another provider, NaviSite finally terminated the contract and stopped providing any services to CareOne or Partners on January 24, 2014.
1.2. Relevant Contract Terms. The Court must construe the parties’ written contracts. Neither side appears to claim that any of the relevant contract documents is ambiguous. “If a contract … is unambiguous, its interpretation is a question of law that is appropriate for a judge to decide on summary judgment.” Seaco Ins. Co. v. Barbosa, 435 Mass. 772, 779 (2002). “Whether a contract is ambiguous is also a question of law.” Eigerman v. Putnam Investments, Inc., 450 Mass. 281, 287 (2007). The Court concludes that the contract documents are unambiguous.
1.2.1. The Original Contract Documents. The parties agreed to allocate the risk of non-performance by NaviSite in several ways that are relevant to the pending claims and counterclaims. This allocation of risk is reflected in terms of the MSA that was executed by CareOne and NaviSite and accepted by Partners when it executed its sales order.
NaviSite agreed to bear much of the risk that it may not be able to deliver systems acceptable to CareOne, by agreeing to accept most of its compensation in the form of monthly recurring payments that would not be due for any service until it was accepted. The contract provides (in MSA §§ 3.1 and 3.3) that NaviSite was not entitled to invoice, and CareOne had no obligation to pay, monthly recurring fees for any service provided by NaviSite until after CareOne had accepted that particular service. NaviSite was required to send CareOne a “Completion Notice” as to each service once it had been fully implemented and was ready for use by CareOne. CareOne would then have ten days to test the service to determine whether it conformed to the agreed-upon specifications. If CareOne notified NaviSite that the
service did not conform to the specifications, then NaviSite would have to use commercially reasonable efforts to fix the problem and submit a new Completion Notice when the service was ready for use. CareOne only had to begin paying the monthly charge for a service if it accepted the service after having received a Completion Notice, or if was deemed to have done so because it did not respond to a Completion Notice within ten days or used the service for purposes other than acceptance testing after receiving a Completion Notice.
CareOne and Partners, in turn, agreed to bear most of the remaining risk that NaviSite might breach its contractual obligations. The MSA placed clear limits on CareOne’s and Partners’ remedies and NaviSite’s liability for any breach of contract.
The contract limits the remedies available to CareOne and Partners for any breach of contract by NaviSite. As relevant here, § 6.4 of the MSA provides that if NaviSite were to breach the contract then CareOne’s or Partners’ “sole and exclusive remedy, and NaviSite’s sole and exclusive liability,” would be as follows: (1) CareOne or Partners could give NaviSite notice of the breach, which would trigger a contractual obligation by NaviSite to work diligently to cure the breach at its expense; (2) CareOne or Partners could obtain a credit against monthly recurring fees for any services affected by the breach of contract; or (3) CareOne or Partners could terminate the contract for any uncured material breach, which would cut off any further obligations by CareOne and Partners to make any payments or doing anything else under the contract.3 The right to terminate the contract for an uncured material breach by the other side is spelled out in MSA § 7.4, which provides that a party could only terminate for an uncured material breach after giving the other side written notice of the claimed breach and at least thirty days to cure the breach.
The contract further limits NaviSite’s potential liabilities in several ways. Section 6.3 bars any claim that NaviSite breached any kind of implied warranty, by specifying that NaviSite did not make and expressly disclaimed any implied warranty of any kind. And § 9.1 provides that neither NaviSite, CareOne, nor Partners shall
3 CareOne and Partners also had the right to seek indemnification of any liability owed to a third-party, to the extent provided under the MSA. No third-party liability is at issue here.
be liable “for any indirect, consequential incidental, special or punitive damages—including, without limitation, loss of use, interruption of business, loss of data or loss of profits—arising out of, or in any way connected with” the parties’ contract.
In addition, the parties agreed to an allocation of the risk that CareOne or Partners might commit a material breach of the contract. Section 7.4 specifies that the failure by CareOne or Partners to pay amounts owed when due would be a material breach, and that NaviSite could terminate the contract if CareOne or Partners failed to make payment after being asked or failed to cure any other material breach. This section also contains an acceleration clause providing that if NaviSite were to terminate a schedule or the whole contract because of an uncured material breach by CareOne or Partners, then the Customer (CareOne or Partners) would have to pay all monthly fees that would have been due through the end of the contract term. The same right to accelerated payment of all monies owed under the contract would also apply if CareOne or Partners terminated the contract in a manner not expressly permitted (e.g., if it terminated for a non-material breach by NaviSite or terminated without giving NaviSite thirty days to cure any material breach). NaviSite has the right (per MSA § 3.2) to be reimbursed for any fees and costs it incurs to collect amounts owed to it under the contrary.
The parties also agreed in MSA § 10.14 that neither side would waive any right under the contract by failing to enforce any provision of it, and that contractual waivers would only be effective if made in writing.
1.2.2. Amendment Number One. The one contract amendment modified the “Completion Notice” requirement and process of the MSA only with respect to NaviSite’s first monthly invoice, which was for January 2013. CareOne agreed to pay that invoice, in exchange for receiving a credit of twice that amount that it could redeem later, even though it had not yet accepted the relevant services.
Nothing in the Amendment eliminated the Completion Notice requirements as a condition precedent to receiving any later monthly payments. That is the only reasonable interpretation of the plain language of Amendment Number One. The Amendment says nothing about eliminating the Completion Notice provisions of the MSA with respect to any monthly invoice for periods after January 2013, or about
CareOne agreeing to pay any other monthly invoices. And the Amendment specifies that, “[e]xcept as provided in this Amendment No. 1, all of the terms and conditions of the Agreement shall remain in full force and effect.”
If the Amendment were ambiguous in this regard, which it is not, then undisputed parol evidence regarding the parties’ negotiations would confirm that the Amendment was not intended to eliminate the condition that CareOne accept each service before having to pay monthly fees for it. In negotiating a possible contract amendment, NaviSite had asked CareOne to commit to timely payment of all future monthly invoices. In response, CareOne’s CTO informed NaviSite that CareOne would not sign the proposed amendment if that meant that CareOne was accepting delivery.4 Five days later NaviSite responded by agreeing to revise the proposed amendment to specify that it did not supersede the MSA.
2. NaviSite’s Claims against CareOne. The Court concludes that CareOne is entitled to summary judgment in its favor on NaviSite’s claims and identical counterclaims for breach of contract and violation of G.L. c. 93A.
2.1. NaviSite’s Contract Claim against CareOne. NaviSite claims that CareOne committed a material breach of the parties’ contract by refusing to pay any monthly invoice for periods after April 2013, that NaviSite had the right under MSA § 7.5 to terminate its contract with CareOne because of this uncured material breach, and that NaviSite is therefore entitled under MSA §§ 3.2 and 7.5 to collect all unpaid amounts owed by CareOne through the effective date of the termination, plus all fees that would have been due under the contract through the end of the contract term, plus all legal fees and costs incurred by NaviSite to collect what it is owed.
CareOne is entitled to summary judgment in its favor on this claim because the undisputed facts indicate that NaviSite never complied with a contractual condition precedent to being able to bill and get paid for the disputed monthly fees. Parties to a contract are free to agree that certain events must occur before one of the parties must carry out some contractual obligation; in law-speak such provisions are
4 The email states: “Please give me a call. Tying the deal of accept delivery now in order to begin invoicing to timely payments is not going to work for us. We will probably have to go back to leaving it as the original then.”
called “conditions precedent.” See generally Massachusetts Mun. Wholesale Elec. Co. v. Town of Danvers, 411 Mass. 39, 45 (1991) (“MMWEC”).
The contract expressly provided (in MSA § 3.1) that NaviSite was not entitled to bill CareOne monthly fees for any service provided by NaviSite until after “Acceptance” of that service by CareOne. Section 3.3 defines a specific process for NaviSite to seek and obtain Acceptance of a service: it had to send a “Completion Notice” informing CareOne in writing that a service has been implemented and is ready for use, and give CareOne ten days to test the service and decide whether to accept or reject it. The summary judgment record shows that NaviSite only sent one Completion Notice, in January 2013, which CareOne promptly rejected. NaviSite never sent another Completion Notice and never obtained Acceptance from NaviSite as that term is define in the contract.
CareOne has no contractual obligation to pay past or future monthly invoice amounts because NaviSite never sought or obtained Acceptance of the services that NaviSite had agreed to provide. Since NaviSite had no contractual right to start billing for those services, it cannot compel CareOne to pay any amount for those services. And, of course, since NaviSite is not entitled to collect any unpaid amounts from CareOne it is also not entitled to collect any legal fees or costs.
NaviSite argues that the MSA did not make Acceptance by CareOne a condition precedent because the contract does not expressly refer to Acceptance as a “condition precedent” or use other sufficiently “emphatic” language to do so. This argument is without merit.
A contract imposes a condition precedent if the contract as a whole makes clear that was the parties’ intent; no particular wording or emphasis is required. MMWEC, supra, at 46 (“[E]mphatic or precise words are not absolutely necessary to create a condition. … In the absence of the usual words, a condition precedent may nonetheless be found to exist if the intent of the parties to create one is clearly manifested in the contract as a whole.”).
Here, the parties agreed (in MSA § 3.1) that NaviSite could only send invoices for monthly fees “beginning on Acceptance of the applicable Services.” That made acceptance a condition precedent to CareOne’s obligation to pay for a service.
Where a contract provides that a party must make payment for services or goods that are accepted or approved, either by the party or by an agreed-upon third-party like an architect, the acceptance or approval is a condition precedent to any duty to make the payment. See F&W Welding Service, Inc. v. ADL Contracting Corp., 587 A.2d 92, 97-98 (1991) (acceptance was condition precedent in contract providing that payment was due within thirty days of acceptance of work); Restatement (Second) of Contracts § 226, illustration 2 (1981) (“A, a tenant of B, promises to pay $ 1,000 for ‘such repairs as an architect appointed by B shall approve.’ The appointment by B of an architect and the architect’s approval of repairs are conditions of A’s duty to pay for repairs.”)
NaviSite also argues that CareOne agreed in the contract amendment to begin paying monthly recurring fees. As discussed above in § 1.2.2 of this decision, that assertion is incorrect. What CareOne agreed to do in the Amendment was to pay the “first monthly recurring invoice for January 2013.” Nothing in the Amendment says that Care Once was agreeing to pay any subsequent monthly recurring fees on services it had not yet accepted. To the contrary, the Amendment specifies that all terms and conditions of the MSA—which necessarily includes the condition precedent of Acceptance—remain in effect except as provided in the Amendment.
Finally, NaviSite asserts that CareOne waived the condition precedent by paying the February, March, and April 2013 invoices without waiting for a Completion Notice and without any Acceptance of the relevant services by CareOne. This argument also fails. The parties agreed by contract (in MSA § 10.14) that “[no failure to … enforce any provision” of the contract “shall be construed as a future waiver” of that provision. Such a “no waiver” provision is enforceable. See Amerada Hess Corp. v. Garabedian, 416 Mass. 149, 154-155 (1993).
2.2. NaviSite’s Chapter 93A Claim against CareOne. NaviSite also claims that CareOne refused to pay what it owed under the contract, tried to “leverage” this breach to pressure NaviSite to renegotiate the terms of the deal, and thereby committed an unfair trade practice in violation of G.L. c. 93A, § 11.
Since NaviSite’s claim under c. 93A is based solely on and thus “is wholly derivative of” its claims for breach of contract, and the summary judgment record
shows that NaviSite’s contract claim is “legally unsupportable,” CareOne is entitled to summary judgment on the c. 93A claim as well. See Frohberg v. Merrimack Mut. Fire Ins. Co., 34 Mass. App. Ct 462, 465 (1993); accord Private Lending & Purchasing, Inc. v. First American Title Ins. Co., 54 Mass. App. Ct. 532, 539-540 (2002).
3. CareOne’s Claims against NaviSite. The Court concludes that NaviSite is entitled to summary judgment in its favor on all of CareOne’s claims against it.
3.1. Breach of Contract Claims. CareOne claims in Counts 1 and 6 of its amended complaint that NaviSite breached its express contractual obligations by terminating the contract instead of curing its non-performance, and that NaviSite breached the implied covenant of good faith and fair dealing by threatening to terminate its services to Partners in an attempt to pressure CareOne into paying money NaviSite had not earned. CareOne seeks actual damages (apparently meaning repayment of all amounts CareOne had paid to NaviSite) and consequential damages.
NaviSite is entitled to summary judgment on these claims because they are barred by the express contractual limitations on CareOne’s remedies and NaviSite’s liability.5 As explained above in § 1.2.1, CareOne agreed that its remedies for a breach of contract by NaviSite would be limited to seeking a cure of any breach, obtaining a credit against future monthly payments owed under the contract, or terminating the contract and thereby cutting off any further liability to NaviSite. Since CareOne expressly waived any right to seek actual or consequential damages from NaviSite for any breach of contract, NaviSite is entitled to judgment in its favor on these contract claims as a matter of law.
CareOne’s insistence that NaviSite was not ready, willing, and able to perform its obligations under the contract is beside the point. True, NaviSite could not prevail on a claim that CareOne breached the contract if NaviSite were unable to demonstrate that it was ready, willing, and able to perform its parts of the contract. Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 690 (2016); Singarella v. City of Boston, 342 Mss. 385, 387 (1961). But, in the absence of a claim and proof of fraud in
5 The Court reads NaviSite’s legal memoranda as arguing that both of CareOne’s contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
the inducement that would render the whole contract voidable—which have not been made or proffered in this case—the contractual limitations on CareOne’s remedies and NaviSite’s liability would be enforceable even if NaviSite’s alleged breach of contract came about because it was not able to perform. See Canal Elec. Co. v. Westinghouse Elec. Corp., 406 Mass. 369, 372-375 (1990) (limitation of liability provision in contract between sophisticated commercial entities held enforceable even if exclusive remedy of cure failed of its essential purpose, as parties apparently stipulated); S.M. Wilson & Co. v. Smith Int’l, Inc., 587 F.2d 1363, 1372-1375 (9th Cir. 1978) (limitation of liability provision enforceable even though defendant could not repair machine and thus was unable to perform) (applying California law). The whole point of MSA §§ 6.4 and 9.1 was to limit NaviSite’s liability should it be unable to perform. CareOne cannot avoid the bite of terms it voluntarily agreed to on the ground that NaviSite was indeed unable to perform.
Nor may CareOne avoid the contractual limitations on remedies and liability on the ground that they are unconscionable. A contract is unconscionable only if no honest and fair person in their right mind would agree to it. Waters v. MIN Ltd., 412 Mass. 64, 69 (1992) (“an unconscionable contract is ‘such as no man in his senses and not under delusion would make on the one hand, and no honest and fair man would accept on the other’ ” (quoting Hume v. United States, 132 U.S. 406, 411 (1889), quoting in turn Earl of Chesterfield v. Janssen, 38 Eng. Rep. 82, 100 (Ch. 1750)). There was nothing crazy about allocating the risk of non-performance in the manner agreed to by CareOne.
To demonstrate that a contract provision is unconscionable and therefore unenforceable, a party must demonstrate that, as of “the time of the execution of the agreement, the contract provision could result in unfair surprise and was oppressive to the allegedly disadvantaged party.” Miller v. Cotter, 448 Mass. 671, 680 (2007), quoting Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 293 (1980).
As a sophisticated business entity, CareOne cannot demonstrate that it did not understand and for that reason is now surprised by the reach of MSA §§ 6.4 and 9.1. Cf. Zapatha, supra, at 294 (person with business experience and education cannot claim unfair surprise as to meaning of straightforward contract provision). Although
CareOne claims it was surprised to learn that NaviSite itself did not possess all of the technical expertise needed to supply the services for which CareOne had contracted, that assertion cannot be squared with the plain language of the contract itself. CareOne expressly agreed in the Statement of Work that the services would be provided by “NaviSite through its Third Party Provider.”
Nor can CareOne demonstrate that the limitation of remedy and liability provisions were oppressive as of the time the contract was executed. There is nothing unconscionable about a contract in which “two commercially sophisticated parties” have agreed to limit potential liabilities in order to allocate among themselves the risks of non-performance. Canal Elec., 406 Mass. at 374.
3.2. UCC Claims. CareOne claims in Count 8 that it is entitled to remedies for NaviSite’s alleged breach of contractual obligations either under art. 2 of the Uniform Commercial Code (which governs sales of goods) or under art. 2A of the UCC (which governs leases of goods). See G.L. c. 106, §§ 2-711 through 2-713, 2A-508, and 2A-518 through 2A-520. And CareOne claims in Counts 11 and 12 that it is entitled under art. 2 or art. 2A to remedies for NaviSite’s alleged breach of implied warranties of merchantability and fitness for a particular purpose. See G.L. c. 106, §§ 2-314, 2-315, 2A-212, and 2A-213.
NaviSite is entitled to summary judgment on these claims because the parties’ contract did not involve a sale or lease of goods and thus was not subject to UCC art. 2 or art. 2A. These UCC articles only apply to the sale or lease of “goods,” meaning things that “are movable at the time of identification to the” contract for sale or lease. See G.L. c. 106, §§ 2-102 and 2-105(1), and §§ 2A-102 and 2A-103(1)(h). Contracts to provide services are not covered by art. 2 or art. 2A. See White v. Peabody Constr. Co., 386 Mass. 121, 132 (1982).
Where a contract calls for the provision of services as well as the sale or lease of moveable goods, “the test is whether the predominant factor, thrust, or purpose of the contract” is to provide services (in which case the UCC does not apply) or to sell or lease goods (in which case it does). Cumberland Farms, Inc. v. Drehmann Paving & Flooring Co., 25 Mass. App. Ct. 530, 534 (1988); accord White, supra.
The summary judgment record makes clear that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. The parties said so in their Master Statement of Work, which provides that “NaviSite through its Third Party Provider will provide” a number of specified “services.” Similarly, MSA § 3.1 provides that CareOne’s obligation to make monthly payments would begin on “Acceptance of the applicable Services.” The MSA defines “Services” to mean “the services (including all associated NaviSite-Supplied Software and NaviSite-Supplied Hardware) purchased by” CareOne. Obviously, when a company like CareOne buys information technology services the provider must use computer hardware to provide the services. But CareOne was not purchasing computers that it would then operate on its own; this was not a contract to provide that kind of “turnkey” system.6 Rather, it hired NaviSite to develop, implement, host, and operate sophisticated computing services that would run on computer hardware located at NaviSite’s facilities.
Since the undisputed facts make clear that the predominant thrust of this contract was the provision of services, the UCC is inapplicable. See Mattoon v. City of Pittsfield, 56 Mass. App. Ct. 124, 141-142 (2002).
3.3. Unjust Enrichment Claim. CareOne claims in Count 9 that NaviSite has been unjustly enriched by the roughly $ 2.4 million it received from CareOne for the four monthly invoices for January through April 2013. CareOne correctly concedes in its summary judgment memorandum that this is a claim in the alternative that is only viable if the Court were to “find that the contract is unenforceable, or that it should be rescinded.”
NaviSite is entitled to summary judgment on this claim because the parties’ relationship was established and defined by an enforceable written contract. “Ordinarily, a claim of unjust enrichment will not lie ‘where there is a valid contract that defines the obligations of the parties.’ ”Metropolitan Life Ins. Co. v. Cotter, 464 Mass. 623, 641 (2013), quoting Boston Med. Ctr. Corp. v. Secretary of Executive Office of Health & Human Servs., 463 Mass. 447, 467 (2012). That is because “[a] valid contract defines the obligations of the parties as to matters within its scope,
6 USM Corp. v. Arthur D. Little Systems, Inc., 28 Mass. App. Ct. 108 (1989), which involved the provision of a turnkey system, is therefore inapplicable here.
displacing to that extent any inquiry into unjust enrichment.” Boston Med. Ctr. Corp., 463 Mass. at 467, quoting Restatement (Third) of Restitution and Unjust Enrichment § 2 (2011).
3.4. G.L. c. 93A, § 11. CareOne claims in Count 4 that NaviSite committed an unfair trade practice in violation of G.L. c. 93A, §§ 2 and 11, by threatening to discontinue service to Partners if CareOne did not pay NaviSite an additional $ 2.2 million under the parties’ contract.
NaviSite is entitled to summary judgment on this claim because CareOne has been unable to muster any evidence that it “suffered a ‘loss of money or property’ within the meaning of G.L. c. 93A, § 11,” which is a required element of any business-to-business claim under c. 93A. Lumbermens Mut. Cas. Co. v. Offices Unlimited, Inc., 419 Mass. 462, 468 (1995) (ordering summary judgment for counterclaim defendant), quoting G.L. c. 93A, § 11; accord Frullo v. Landenberger, 61 Mass. App. Ct. 814, 822-823 (affirming summary judgment for defendant), rev. denied, 442 Mass. 1111 (2004).
CareOne has admitted that it did not incur any costs to migrate its users to another information technology vendor after NaviSite threatened to terminate its contract and then carried out that threat.
Although CareOne argues that its employees had to spend time dealing with NaviSite’s threats to terminate its contract, this alleged loss of employee time does not constitute a “loss of money” within the meaning of the statute. Under § 11, “ ‘Money’ means money, not time, and … ‘property’ means the kind of property that is purchased or leased, not such intangibles as a right to a sense of security, to peace of mind, or to personal liberty.” Tech Plus, Inc. v. Ansel, 59 Mass. App. Ct. 12, 20, rev. denied, 440 Mass. 1108 (2003), quoting Baldassari v. Public Fin. Trust, 369 Mass. 33, 45 (1975). A mere loss of time in having to respond to and deal with any consequences of an alleged unfair trade practice is not a “loss of money” within the meaning of § 11. Halper v. Demeter, 34 Mass. App. Ct. 299, 303-304 (1993) (vacating judgment for plaintiff on claim under c. 93A, § 11).
The two Appeals Court decisions cited by CareOne do not hold that loss of time that results in no loss of money is compensable under G.L. c. 93A, § 11. VMark held only that damages for tortious misrepresentation can include compensation for
“hours fruitlessly spent by … employees trying to make the defective computer system work.” See VMark Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 620-621 (1994). The court never reached the issue of whether similar compensation is available under § 11 because it held that awarding such damages would be cumulative and that the plaintiff was not entitled to double or treble damages. Id. In Bump, the plaintiff was a business broker who charged clients for his time; the Appeals Court held that the plaintiff could recover for futile time spent trying to sell a company as a result of defendant’s unfair trade practices was compensable under § 11 because plaintiff’s inability to charge that time to other clients or projects was a loss of money. See Bump v. Robbins, 24 Mass. App. Ct. 296, 312 (1987). CareOne has presented no evidence that it lost money because it was unable to charge employees’ time to other projects.
3.5. Declaratory Judgment. In Count 10, CareOne seeks declaratory judgment regarding whether CareOne is liable to make accelerated payments under the contract now that NaviSite has terminated the contract and whether the contractual limitations on remedies and liability are unconscionable and.
The Court disagrees with NaviSite’s assertion that this claim is moot. NaviSite points that the contract has been terminated and the parties have no ongoing contractual relationship. But there nonetheless remains an actual controversy regarding the enforceability of the disputed contractual provisions and whether NaviSite is entitled to collect any more money from CareOne under the contract. The mere fact that there is no uncertainty regarding future relations among the parties does not moot the actual controversy regarding claims of past liability. See FMR Corp. v. Boston Edison Co., 415 Mass. 393, 396 (1993) (grant of summary judgment on plaintiff’s claims ended any obligation by defendant’s insurer to provide a defense, but did not moot defendant’s claims against insurer for past defense costs).
Since CareOne has standing and there is an actual controversy between the parties regarding their rights and obligations under their contract, the Court is obligated to declare the rights of the parties rather than dismiss this claim. See, e.g., Attorney General v. Kenco Optics, Inc., 369 Mass. 412, 418 (1976); Gennari v. City of Revere, 23 Mass. App. Ct. 979 (1987) (rescript). The Court will order the entry of
declaratory judgment consistent with its legal rulings regarding the failure of NaviSite’s contract claims against CareOne and the enforceability of the contractual limitations on remedies and liability.
4. Partners’ Claims against NaviSite. Finally, the Court concludes that NaviSite is also entitled to summary judgment in its favor on all of Partners’ claims. Although the claims asserted by Partners are in many respects quite similar to those by CareOne, the Court addresses them separately to make clear its resolution of NaviSite’s separate motion for summary judgment against Partners’ claims.
4.1. Breach of Contract. In Counts 1 and 5 of its amended complaint, Partners asserts claims for breach of express contractual obligations and breach of the implied covenant of good faith and fair dealing. These claims fail as a matter of law for the same reasons that CareOne’s very similar claims fail, as discussed above in § 3.1 of this decision. Even assuming that Partners had mustered any evidence that it suffered any compensable damages, which NaviSite contests, these claims would be barred by the contractual limitations on remedies and liability set forth in MSA §§ 6.4 and 9.1. 7
4.2. UCC Contract Remedies. Partners’ claim under the UCC in Count 7 fails as a matter of law because the party did not contract for the sale or lease of goods, as discussed above in § 3.2 of this decision.
The sales order signed by Partners establishes that the predominant thrust of this contract was the rendition of services by NaviSite and its subcontractors. Partners agreed to pay a one-time fee of $ 39,867.60 to cover hardware and software installation costs. It also agreed to pay $ 74,711.72 every month throughout the life of the contract for NaviSite to monitor and manage specified information technology “services.” The contract did not call for NaviSite to deliver a “turnkey” system that Partners would run on its own. To the contrary, Partners was hiring NaviSite to provide information technology services. The UCC does not apply to such a contract
7 The Court reads NaviSite’s legal memoranda as arguing that both of Partners contract claims are barred by the contractual limitations on remedies and liability, and arguing in the alternative that there are additional reasons why CareOne’s implied covenant claim fails as a matter of law.
because it is not predominantly for the sale or lease of goods. See, e.g., White, 386 Mass. at 132; Mattoon, 56 Mass. App. Ct. at 141-142.
4.3. G.L. c. 93A, § 11. Partners’ claim under c. 93A, § 11, in Count 3 fails for the reasons discussed above in § 3.4 of this decision: Partners has no evidence that it suffered any loss of money as a result of any alleged unfair trade practices. NaviSite has convincingly demonstrated that Partners ended up saving money as a result of NaviSite’s termination of the contract because Partners incurred no out-of-pocket cost to migrate to a new vendor and the total amount charged by the new vendor was less than what Partners would have owed NaviSite under their contract. In its memorandum in opposition, Partners does not even argue that it suffered a “loss of money” within the meaning of c. 93A, § 11.
4.4. Tortious Interference. Partners claims in Count 2 that NaviSite intentionally interfered with Partners’ contractual relationships with more than 500 long term care facilities by threating to stop providing service to Partners in an attempt to pressure CareOne into paying more.
NaviSite is entitled to summary judgment on this claim because there is no evidence that it actually interfered with a contract or other advantageous relationship. There is no evidence that NaviSite conduct other caused one or more of Partners’ clients to breach their contract with Partners, or that NaviSite did anything that prevented Partners from continuing to service any of its customers.
To make out its claim for tortious interference with contractual relations, Partners must prove that: (1) Partners had a contract with a third party; (2) NaviSite knowingly interfered with that contract either by inducing the third party to break the contract or by preventing Partners from performing its contractual obligations; (3) NaviSite’s interference with the contract was improper in motive or means; and (4) Partners was harmed as a result. See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 84 (2014); Shafir v. Steele, 431 Mass. 365, 369 (2000).
Partners argues that, under Shafir, it can prove the second or “interference” element of this claim by proving that NaviSite “caused the performance of Partners’ contract with its customers … to be more expensive and more burdensome,” even if it
has no evidence that the claimed additional burden caused either Partners or its customer to stop performing the contract. That is incorrect. Partners misreads Shafir.
In Shafir, the Supreme Judicial Court broadened the tort of interference with contracts under Massachusetts law, but not in a way that helps Partners. Prior cases held, consistent with Restatement (Second) of Torts § 766, that to prove this tort the plaintiff must show that “the defendant knowingly induced” a third party “to break” its contract with the plaintiff. See, e.g., G.S. Enters., Inc. v. Falmouth Marine, Inc., 410 Mass. 262, 272 (1991). Shafir adopted § 766A of the Restatement, and held that it is just as tortious to interfere with a contract by making the plaintiff’s own performance more expensive or burdensome and thereby “preventing the plaintiff from performing” his contractual obligations. 431 Mass. at 369. But the SJC did not eliminate the element of interference that caused some party to the contract not to perform its obligations. Id. at 369-370.
If a defendant deliberately makes it more burdensome and difficult to carry out a contract, but that attempted interference never causes any party not to perform their contractual obligations, then the defendant has not committed the tort of intentionally interfering with contractual relations. See Anzalone v. Massachusetts Bay Transp. Auth., 403 Mass. 119, 123 (1988) (supervisor’s deliberate mistreatment of employee, including forcing him to suffer noxious fumes and work in a close room hotter than 100 degrees Fahrenheit, held not to constitute tortious interference because employment contract obligations were fully performed).
4.5. Declaratory Judgment. In Count 10, Partners seeks the same declaration of rights as CareOne. For the reasons stated above in § 3.5 of this decision, Partners is entitled to a declaration of the parties’ rights on the topics identified in this claim.
ORDER
CareOne Management, LLC’s motion for summary judgment on the claims and counterclaims against it by NaviSite, Inc. is ALLOWED.
NaviSite’s for summary judgment in its favor on the claims against or by CareOne is DENIED IN PART with respect to NaviSite’s claims against CareOne and ALLOWED IN PART with respect to CareOne’s claims against NaviSite.
The motion by NaviSite for summary judgment in its favor on the claims against it by Partners Pharmacy Services, LLC is ALLOWED.
Final judgment shall enter (1) declaring that neither CareOne Management, LLC, nor Partners Pharmacy Services, LLC, has any obligation to further perform or to make any accelerated payments under their contracts with NaviSite, Inc., the parties’ Master Services Agreement is not voidable, and the limitation on liability and exclusive remedies provisions in the parties’ contracts are valid and enforceable; and (2) dismissing all other claims and counterclaims with prejudice.
April 24, 2017
___________________________
Kenneth W. Salinger
Justice of the Superior Court

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Posted by Stephen Sandberg - April 26, 2017 at 3:29 pm

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