In Lubin & Meyer v. John J. Manning, Judge Salinger, sitting in the Business Litigation Session, ruled that Lubin & Meyer’s claims for breach of fiduciary duty against its former associate, John Manning, survived summary judgment.
According to Judge Salinger, Lubin & Meyer claimed that Manning breached his duty of loyalty to the firm by “continu[ing] to work on cases that the firm had rejected, l[ying] to clients about whether the firm was representing them, and l[ying] to the firm about what he was doing.”
FTI sued three of its former employees who went to work for Berkeley Research Group (Berkeley), an FTI competitor. The former employees, FTI alleged, breached their FTI employment contracts and their fiduciary duty of loyalty owed to FTI. FTI also sued Berkeley, alleging that Berkeley aided and abetted the former employees’ breach of their fiduciary duties.
The defendants moved to strike the fiduciary-duty claims. Judge Salinger allowed the motion in part, striking the claim for breach of fiduciary duty against the former employees. But Judge Salinger denied the motion to the extent that it aimed to strike the aiding and abetting claim against Berkeley.
“Under Massachusetts law,” Judge Salinger observed in Stone v. Remillard, “a corporation does not owe a fiduciary duty to its shareholders.” In support of that blackletter law, Judge Salinger cited to footnote three of Merola v. Exergen Corp., 423 Mass. 461 (1996).
In Butts, et al. v. Freedman, et al., Judge Sanders ruled that the language of a Massachusetts LLC operating agreement—disclaiming any “partnership” or “joint venture” relationship between the LLC members—did not bar an LLC member from pursuing a claim for breach of fiduciary duty against another LLC member. The language at issue, according to Judge Sanders, did not constitute “a clear and unequivocal elimination of one member’s fiduciary responsibility to another.”
As we previously noted here, the SJC earlier this year issued its opinion affirming Judge Leibensperger’s decision in a matter arising out of the EMC-Dell merger. Taken together, those decisions set a landmark in Massachusetts corporate governance law by delineating the fiduciary duties of directors of Massachusetts corporations and differentiating them from Delaware’s precepts. EMC’s counsel, Tom Dougherty and Kurt Hemr, published an insightful Special Commentary about those decisions as a preface to the 2017 edition of CSC Lexis/Nexis Massachusetts Laws Governing Business Entities Annotated. We recommend the Special Commentary to our readers, which can be found here.
Note: Nutter filed an amicus brief with the SJC in this matter on behalf of the Associated Industries of Massachusetts.
In IBEW Local No. 129 Ben. Fund v. Tucci., the Supreme Judicial Court (SJC) affirmed a decision by Judge Leibensperger of the BLS dismissing a class action brought by EMC shareholders against EMC board members. The plaintiff alleged that the board members violated their fiduciary duties when they approved the sale of EMC to Dell for $64 billion. Affirming Judge Leibensperger’s decision, the SJC held that directors of a Massachusetts corporation generally have a unitary duty to act in the best interests of the corporation, rather than dual duties that run to both the corporation and its shareholders.