In Crashfund LLC v. FaZe Clan, investors in Wanderset Inc. sued successor e-gaming company, FaZe Clan. Wanderset investors claimed that their agreements with Wanderset granted them conditional rights to obtain stock proportionate to their investment upon a “change of control.” The investors also claimed that FaZe Clan refused to issue stock to them after a de facto merger with Wanderset in violation of the agreements. FaZe Clan was sued for, among other things, breach of contract. The investors alleged two theories:
- that the investors’ conditional right to stock in the event of a change of control entitled them to FaZe Clan stock after the de facto merger, or alternatively,
- that FaZe Clan, as the successor entity, was liable for consequential damages caused by Wanderset’s alleged breach of the investor agreements.
It was another eventful year at the BLS, which included Judge Green replacing Judge Kaplan in the BLS1. As 2020 concludes, check out our top five widely read posts:
- Facebook Ordered to Turn Over Internal Investigation Documents to Massachusetts Attorney General: Judge Davis of the BLS ordered Facebook to produce documents to Massachusetts Attorney General Maura Healey (AG). The AG obtained the order while investigating Facebook’s policies and protections related to user data.
- Community Health Systems Affiliate Found Subject to Personal Jurisdiction in Massachusetts: In Steward Health Care System v. CHSPSC, Judge Sanders found that CHSPSC, an affiliate of Community Health Systems (CHS), is subject to personal jurisdiction in Massachusetts for claims made under transition-services agreement (TSAs) signed along with an asset-purchase agreement (APA).
- lululemon’s Motion to Dismiss Eviction Case Denied: In CWB Retail Limited Partnership v. Lululemon USA, Inc., lululemon moved to dismiss a summary-process action brought by its landlord, CWB Retail Limited Partnership.
- Comcast Prevails in Dispute over Interpretation of Commercial Lease: Maynard Industrial Properties Associates Trust (MIPA), a commercial landlord, sued Comcast of Massachusetts III, Inc. (Comcast). The dispute focused on the amount Comcast would owe under an extension of the amended lease.
- John J. Donovan Loses Again: Court Rules that Award in Derivative Action be Distributed Based on Shareholders’ Investment to Avoid Windfall to Disloyal Fiduciary: In Brining v. Donovan, the latest blow to former MIT business professor, John J. Donovan, Judge Davis held that shareholders in Donovan’s failed internet start-up, SendItLater (SIL), could recover more than $700,000 in attorneys’ fees in addition to a December 2019 award of $1.57 million in damages.
Under Massachusetts procedure, a party has the right to compel an opponent to disclose its testifying expert’s opinions through interrogatories. But unlike federal procedure, a party under Massachusetts procedure must obtain leave of court to depose a testifying expert. See Mass. R. Civ. P. 26(b)(4)(A). That relief is warranted, according to Judge Salinger writing in Lubin & Meyer, P.C. v. Manning, only if an expert deposition is “reasonable and necessary.”
As Judge Salinger observed in Lubin & Meyer, a party can typically make that showing where a deposition “is needed to obtain information effectively to cross-examine the expert, and that doing so will likely streamline the presentation of the case at trial.” Or as Judge Salinger wrote (quoting Nelson G. Apjohn, Further Discovery of Expert Witnesses Under Massachusetts Rule of Civil Procedure 26, 88 Mass. L. Rev. 197, 199 (2004)), “‘a court should allow a motion for further discovery under Rule 26(b)(4) if it is satisfied that the moving party’s interest is limited to obtaining the information needed for cross-examination and not designed to build her own case on the work of an opposing party’s expert.’”
Lubin & Meyer, Judge Salinger ruled, failed to make the requisite Rule 26(b)(4)(A) showing.
Judge Salinger first noted that the defendant’s expert “provided a 47-page report that discusses his relevant background and expertise, identifies the case materials he has reviewed, describes his understanding of the case, and explains in detail the opinions and conclusions [he] reached.”
He then rejected the plaintiff’s two arguments in favor of allowing the expert deposition.
First, Plaintiff argues that it should be allowed to ask the witness whether he has opinions that are not disclosed in his report. But there is no need to depose any expert regarding opinions that they have not disclosed. At trial, the expert’s testimony will be limited to what is contained in his expert report.
Second, Plaintiff says it will be challenging the admissibility of this witness’s opinions on the ground that he is not qualified to testify on these topics, the proffered opinions are irrelevant, and the issues addressed in the expert’s report are not the appropriate subject of expert testimony. But Plaintiff does not explain why it needs to depose the witness in order to raise such challenges. The expert’s written report either does or does not establish that he is qualified to testify about the disclosed opinions and conclusions. And Defendant either can or cannot show that those opinions are relevant and the proper subject of expert testimony. There is no apparent need for an expert deposition on any of those gatekeeper issues of admissibility.
Judge Salinger concluded: “In sum, Plaintiff has not shown that deposing Defendant’s expert is reasonable and necessary. The Court will therefore deny the motion.”
The Business Litigation Session of the Massachusetts Superior Court:
Docket Number: 1784CV02352-BLS2
Case Name: LUBIN & MEYER, P.C. V. JOHN J. MANNING
Date of Decision: March 9, 2020
Judge: Kenneth W. Salinger, Justice of the Superior Court
In CWB Retail Limited Partnership v. Lululemon USA, Inc., lululemon moved to dismiss a summary-process action brought by its landlord, CWB Retail Limited Partnership. CWB sought to evict lululemon after CWB sent three notices of default. The notices alleged that lululemon was unlawfully storing goods in a corridor leading to an emergency exit. lululemon moved to dismiss the action on three grounds: (1) the notices of default were ineffective because they were sent to the wrong address; (2) the notices were inadequate because they did not specify what code provision lululemon had violated; and (3) the claimed defaults were not serious enough to warrant forfeiture of the lease. Judge Salinger denied the motion.
In Crotty v. Continuum Energy Technologies, Judge Salinger granted Thomas Crotty’s special motion to dismiss counterclaims for tortious interference brought by Continuum Energy Technologies (CET) and John Preston under the Massachusetts anti-SLAPP statute.
This is the latest litigation chapter in "the unravelling of a lengthy business relationship" between CET’s co-founders, John Preston and Christopher Nagel, after Nagel resigned in 2014 to form a competing business, IDL Development, Inc. (IDL). Preston and CET brought claims against Nagel and IDL alleging that Nagel had utilized and exploited CET’s proprietary information without a license. In March 2018, the parties entered into settlement and licensing agreements, under which CET licensed certain intellectual property to IDL. Crotty had participated in these settlement negotiations on behalf of IDL as its lead investor. IDL subsequently defaulted on its payment obligations and declared bankruptcy.
Emphasizing the concept of “notice pleading” under Mass. R. Civ. P. 8, Judge Salinger recently denied a gelatin factory’s motion to dismiss. In Baranofsky v. Rousselot Peabody, Inc., a proposed class of neighboring City of Peabody residents brought nuisance, negligence, and trespass claims against Rousselot Peabody, Inc. based on “overpowering smells of rotting flesh” allegedly emitted by its factory.
In Parker v. EnerNOC, Parker alleged that she was terminated less than one month after closing the most lucrative client contract in EnerNOC’s history in part because she complained about the amount of her commission for the contract. Although Parker prevailed on her Wage Act claim in the BLS, she appealed after the BLS judge did not treble a portion of the commissions she was owed. Parker, as discussed below, prevailed on appeal.
To help slow the spread of the COVID-19 pandemic, Governor Baker has ordered businesses to suspend physical operations unless he deems them “essential.” Under his emergency orders, Governor Baker considers medical-marijuana treatment centers (MTCs) and liquor stores to be essential, but he considers adult-use marijuana establishments to be non-essential.
In B. Bullen et al. v. CohnReznick LLP, investors in a defunct hedge fund sued CohnReznick, the outside auditor and accountant of the fund. The investors claimed, among other things, that CohnReznick had conspired with the fund to defraud its investors. Judge Salinger dismissed the case, ruling that CohnReznick, a New Jersey LLP headquartered in New York, was not subject to personal jurisdiction in Massachusetts.
After prevailing at trial, Cedar Hill Retreat Center sought sanctions against the plaintiffs under G.L. c. 231, § 6F. That statute authorizes a judge to award a moving party reasonable attorneys’ fees and costs if the judge finds that “all or substantially all of the claims, defenses, setoffs or counterclaims . . . made by any party who was represented by counsel . . . were wholly insubstantial, frivolous and not advanced in good faith.” Judge Salinger denied the motion because he was not convinced that “all or even substantially all of the claims against Cedar Hill were frivolous and not advanced in good faith.”
That is not to say, however, that the court did not find one of the claims “troubling.” Judge Salinger struggled to “discern what good faith basis the [Reed] Foundation had for alleging that Cedar Hill’s challenged activities were in trade or commerce and therefore subject to c. 93A, or that those activities constitute unfair or deceptive acts or practices and would have violated c. 93A if the statute applied in the first place.” But even if he assumed that the 93A claim was wholly insubstantial and not asserted in good faith, that was not enough, according to Judge Salinger, to impose § 6F sanctions. Cedar Hill did not show, Judge Salinger wrote, “that all or substantially all of the Reed Foundation’s claims . . . were both frivolous and not asserted in good faith” (emphasis added).
- Senior Editor, Co-Chair, Business Litigation Practice Group