Krepps v. NIIT (USA), Inc.

Filing 65

MEMORANDUM Opinion and Order Signed by the Honorable Jeffrey Cole on 6/12/2013:Mailed notice(jms, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MATTHEW B. KREPPS,
Plaintiff,
v.
NIIT (USA), INC.,
Defendant.

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No. 11 C 8787
Magistrate Judge Jeffrey Cole

MEMORANDUM OPINION AND ORDER
The plaintiff is an economist who, during the pertinent period, was a faculty member with
Insead, a French business school with multiple campuses in Europe, Asia and the Middle East. His
company, Economist’s Advocate, entered into a Joint Venture Agreement with a company called
Cognitive Arts, the purpose of which was the development and marketing of business course
materials.1 The result was litigation in the Southern District of New York and now in this District.
Here, the plaintiff is suing Cognitive Arts’ successor, NIIT (USA), Inc., to enforce a stock option
he had under the Joint Venture Agreement, whose labyrinthine provisions seem designed to
conceal rather than to elucidate the parties’ true purpose.
Upon the termination of the joint venture, Mr. Krepps claims that the Joint Venture
Agreement entitles him to convert his shares in the joint venture to Cognitive Arts common stock.
NIIT acquired Cognitive Arts in February 2003 and is involved here because the Joint Venture
Agreement stated that its provisions would:
be binding upon [Economist’s Advantage] and [Cognitive Arts] and their respective
successors and assigns. Without limitation of the foregoing, the provisions of the

1

Throughout its submissions, NIIT refers to the Joint Venture Agreement as “the Letter Agreement.”
(NIIT’s Memorandum of Law, at 2).

[shares conversion option] shall be interpreted, mutatis mutandis, to give effect to the
parties’ intention that [Economist’s Advocate] shall have the option to convert its
interests in the [joint venture] into either equity of [Cognitive Arts] or any successor
entity to [Cognitive Arts] if [Cognitive Arts] is acquired by a third person.
(Amended Complaint, Ex. 1). NIIT is moving for summary judgment, arguing that because of what
happened in the New York litigation, plaintiff is judicially estopped from maintaining the current
claim.
I.
BACKGROUND
A.
Summary Judgment Under Local Rule 56.1
As always, the facts underlying this summary judgment proceeding are drawn from the
parties’ Local Rule 56.1 submissions. “For litigants appearing in the Northern District of Illinois,
the Rule 56.1 statement is a critical, and required, component of a litigant's response to a motion for
summary judgment.” Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, –, (7th Cir. 2012). Local Rule
56.1 requires a party seeking summary judgment to include with its motion “a statement of material
facts as to which the ... party contends there is no genuine issue and that entitle the ... party to a
judgment as a matter of law.” Local Rule 56.1(a)(3); Ciomber v. Cooperative Plus, Inc., 527 F.3d
635, 643 (7th Cir. 2008). Each paragraph must refer to the “affidavits, parts of the record, and other
supporting materials” that substantiate the asserted facts. Local Rule 56.1(a)(3); F.T.C. v. Bay
Area Business Council, Inc., 423 F.3d 627, 633 (7th Cir. 2005).
The party opposing summary judgment must then respond to the movant's statement of
proposed material facts; that response must contain both “a response to each numbered paragraph
in the moving party's statement,” Local Rule 56.1(b)(3)(B), and a separate statement “consisting of
short numbered paragraphs, of any additional facts that require the denial of summary judgment,”
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Local Rule 56.1(b)(3)(C); Ciomber, 527 F.3d at 643. Again, each response, and each asserted fact,
must be supported with a reference to the record. Local Rule 56.1(b)(3)(B); Cracco v. Vitran Exp.,
Inc., 559 F.3d 625, 632 (7th Cir. 2009); Bay Area Business Council, Inc., 423 F.3d at 633.
The district court is entitled to enforce strict compliance with its local rules regarding
summary judgment motions. Yancick v. Hanna Steel Corp., 653 F.3d 532, 537 (7th Cir. 2011);
Schmidt v. Eagle Waste & Recycling, Inc., 599 F.3d 626, 630 (7th Cir.2010). Responses and facts
that are not set out and appropriately supported in an opponent’s Rule 56.1 response will not be
considered, see Shaffer, 662 F.3d at 442 (court need not consider any fact not contained in the
parties' Rule 56.1 statements); Bay Area Business Council, 423 F.3d at 633 (court properly
disregarded affidavits not referenced in 56.1 submission). And of course, the evidence must be
admissible at trial. See Lopez v. Ford Motor Co., 2012 WL 1021796, 3 (N.D.Ill. 2012)(collecting
cases); Gbur v. City of Harvey, Ill., 835 F.Supp.2d 600, 607 (N.D.Ill. 2011)(collecting cases);
Andrew Polovin and Andrew MacNally, Practical and Strategic Considerations for Addressing
Evidentiary Issues at Summary Judgment, The Circuit Rider 21 (May 2013).
B.
FACTS
The previous litigation was in the Southern District of New York in 2001. Economist’s
Advocate, LLC v. Cognitive Arts Corp., No. 01 Civ. 9468 (RWS). (Def.St., ¶ 7; Pl.Rsp., ¶ 7).
Economist’s Advantage, the plaintiff’s firm, sued Cognitive Arts and Insead in the aftermath of the
joint venture. The plaintiff alleged that he had entered into an agreement to terminate the joint
venture with the two under which he released his stock option rights and intellectual property rights
in exchange for a promised payment of $500,000. (Def.St., ¶ 8; Pl.Rsp., ¶ 8; Dkt. 43-3, ¶¶ 11-12).

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Cognitive Arts and Insead apparently didn’t come through with the money, and this led to plaintiff’s
breach of contract and quantum meruit claims, among others.
In his quantum meruit claim, plaintiff alleged that:
[a]t the specific request of [Cognitive Arts], [Economist’s Advantage] agreed to
release its rights under the Letter Agreement and the Development Agreement, and
assigned its intellectual property rights in the Course Materials to INSEAD and
INSEAD OnLine.

It is further claimed that Economist’s Advantage is “entitled to the fair value of the release of its
rights under the [Joint Venture] Agreement and the Development Agreement, and the fair value of
the intellectual property rights in the Course Materials that it assigned to INSEAD and INSEAD
OnLine, which together exceed $8,000,000.” (Def.St., ¶ 9, Pl.Rsp., ¶ 9; Dkt. 43-3, ¶¶ 33-34).2
In February 2003, while the litigation was pending in New York, the defendant here, NIIT,
acquired Cognitive Arts. (Amended Complaint, ¶ 24). Also while the litigation was pending, on
May 2, 2003, Economist’s Advantage, acting through plaintiff, informed Cognitive Arts that it was
exercising the Joint Venture Agreement’s conversion option. (Def.St., ¶ 10; Pl.Rsp., ¶ 10; Amended
Complaint, ¶ 45). It also informed Cognitive Arts that “[t]his exercise of [Economist’s Advantage’s]
conversion rights is without prejudice to any position that [Economist’s Advantage] has taken or
may take in the [SDNY litigation].” (Def.St., ¶ 11; Pl.Rsp., ¶ 11). Of course, the position it had
taken was that it had released its rights to exercise that option. Cognitive Arts ceased operating as
an independent entity on May 23, 2003. (Amended Complaint, ¶ 35).

2

Plaintiff made the same allegations in a claim for unjust enrichment. (Dkt. # 43-3, ¶¶37-38).

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The SDNY litigation went to trial in November 2004. Economist’s Advantage prevailed on
its quantum meruit claim. (Def.St., ¶ 14; Pl.Rsp., ¶ 14). The court entered judgment in its favor in
the amount of $320,000. (Def.St., ¶ 15; Pl.Rsp., ¶ 15).
II.
ANALYSIS
A.
Summary Judgment
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as
to any material fact.” Fed.R.Civ.P. 56(a). While a party moving for summary judgment need not
introduce evidence rendering its opponents' claims altogether impossible, the movant “always bears
the initial responsibility” of showing “the absence of a genuine issue of material fact.” Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986); Seng-Tiong Ho v. Taflove, 648 F.3d 489, 496-97 (7th Cir.
2011); Stevens v. Housing Authority of South Bend, Indiana, 663 F.3d 300, 305 (7th Cir. 2011). This
is done by “identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex, 477 U.S. at 324; Logan v. Commercial Union Ins. Co.,
96 F.3d 971, 979 (7th Cir.1996) (“Only after the movant has articulated with references to the record
and to the law specific reasons why it believes there is no genuine issue of material fact must the
nonmovant present evidence sufficient to demonstrate an issue for trial.”).
Once “a properly supported motion for summary judgment is made,” the nonmoving party
bears the burden to “set forth specific facts showing that there is a genuine issue for trial.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (internal quotation marks and citation omitted);
Seng-Tiong, 648 F.3d at 496-97. Notably, any party asserting that a fact is or is not genuinely

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disputed must cite “to particular parts of materials in the record,” or show that “an adverse party
cannot produce admissible evidence to support the fact.” Fed.R.Civ.P. 56(c)(1). Thus, “a party
opposing a properly supported motion for summary judgment may not rest upon mere allegation or
denials of his pleading.” Anderson, 477 U.S. at 256; Seng-Tiong, 648 F.3d at 497. Additionally, a
“court need consider only the cited materials.” Fed.R.Civ.P. 56(c)(3).
NIIT argues, first, that it is entitled to summary judgment under the doctrine of judicial
estoppel. It explains that the plaintiff’s position in the New York suit was that he terminated or
released his stock option rights, as a result of which he was relegated to his (successful) quantum
meruit claim. And, because he succeeded on his quantum meruit claim, he cannot take a contrary
position here. Yet, says the defendant, that is exactly what he is doing. The plaintiff contends that
he is not taking a contrary position; that in the New York litigation, his quantum meruit claim for
the value of his release morphed into a claim for the value of services he rendered to Insead, and that
claim was not dependent on his release of his stock option rights.
As an alternative to its judicial estoppel argument, NIIT contends that it merely purchased
the assets of Cognitive Arts and that the Joint Venture Agreement was expressly excluded from the
assets Cognitive Arts was assigning. It acknowledges that there are a few exceptions to the general
rule regarding corporate successor liability but that none of those are applicable here. The plaintiff
contends that at least one, if not more of them is.
B.
Judicial Estoppel Is Inapplicable
The Supreme Court most recently explored the doctrine of judicial estoppel in Zedner v.
United States, 547 U.S. 489 (2006):

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[W]here a party assumes a certain position in a legal proceeding, and succeeds in
maintaining that position, he may not thereafter, simply because his interests have
changed, assume a contrary position, especially if it be to the prejudice of the party
who has acquiesced in the position formerly taken by him. This rule, known as
judicial estoppel, generally prevents a party from prevailing in one phase of a case
on an argument and then relying on a contradictory argument to prevail in another
phase.

Id. at 504 (quotations omitted). The Court went on to explain that while the equitable doctrine could
not be reduced to a precise formula, several factors typically informed the decision whether to apply
it: the party's later position must be clearly inconsistent with its earlier position; the party must have
succeeded in persuading the district court to accept its earlier position; the party seeking to assert
an inconsistent position would derive an unfair advantage or impose an unfair detriment on the
opposing party if not estopped. 547 U.S. at 504. The dispute the parties have here is whether the
plaintiff succeeded in persuading the district court in New York to accept his previous position that
he released his stock option rights. If he did, judicial acceptance of his position that he still has that
option would create the perception that the plaintiff either gulled the court in the Southern District
or is attempting to do so here. Walton v. Bayer Corp., 643 F.3d 994, 1002 (7th Cir. 2011).
For NIIT, there can be no question that the plaintiff succeeded on his quantum meruit claim
which required the court to find that the plaintiff released his stock option rights. Accordingly, he
cannot maintain a contradictory position here, as he is explicitly doing. That at least is the theory.
However, the plaintiff contends that by the time his quantum meruit claim made it to trial in New
York, it was no longer about his release of his stock option rights, but about services rendered to
Insead. In support, the plaintiff offers the final pretrial order and transcript pages from the trial
covering jury instructions and the jury’s responses to questions from the special verdict form. The
problem is that the plaintiff did not present certified copies of these documents in compliance with
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Fed.R.Civ.P. 44, and NIIT objected to their admissibility in its reply brief. The plaintiff was given
leave to file a surreply but in that filing, he surprisingly did not address NIIT’s objection. And so,
the plaintiff has effectively conceded the inadmissibility of his evidence, for failure to respond to
a point may be deemed a waiver or a concession of the point. See Gonzalez-Servin v. Ford Motor
Co., 662 F.3d 931, 933 (7th Cir. 2011); Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010);
United States v. Vrdolyak, 593 F.3d 676, 691 (7th Cir. 2010); Midwest Generation EME, LLC v.
Continuum Chemical Corp., 2010 WL 2517047, 8 (N.D.Ill. 2010)(collecting cases).
There is, however, the district court’s ruling on the parties’ motions for summary judgment
in the New York case. In it, the court addressed Economist’s Advantage’s quantum meruit claim
in some detail. First, it rejected Insead’s argument that Economist’s Advantage’s quasi-contract
claims were barred by the Joint Venture Agreement. Rejecting that contention, the court explained
that “the Joint Venture Agreement only covers the internal operations and financial structure of the
joint venture and does not address the provision of services to and compensation by outside entities,
such as Insead.” Economist's Advocate, LLC v. Cognitive Arts Corp., 2004 WL 728874, *10
(S.D.N.Y. 2004)(emphasis supplied).
That the quantum meruit claim is about the value of services and not about the value of the
stock option became even clearer thereafter when the court explained that:
Economist’s Advantage claims to have performed the following services for Insead
between October 1999 and April 2001: conducted industry research and identified
market opportunities, organized and managed a 3 day conference, created and
delivered a conference presentation in London, arranged and conducted interviews
at an Insead-sponsored conference, and conducted and taped executive interviews
in San Francisco, New York, and Boston. According to Economist’s Advantage,
Insead accepted and enjoyed the benefits of Economist’s Advantage's recording of
the January 2000 conference and organization of executive interviews by utilizing
these videotaped sessions in online learning proposals to at least two prospective

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clients and that Economist’s Advantage's contributions are embodied in the work
product produced by Insead and Cognitive Arts.

2004 WL 728874, *10.
Rule 44 problems or not, the plaintiff is obviously right. To succeed on his quantum meruit
claim, he did not have to convince the court that he released his stock option rights because his claim
was about services rendered. It does not matter what he alleged in his complaint; those allegations
were obviously abandoned, and so there is no danger of creating a perception that either the New
York court or this court was, or will be, misled. Walton, 643 F.3d at 1002. Because the plaintiff
recovered for services rendered and not for value of his release of his stock option, there can be no
double recovery if he recovers for his stock option here. See Menominee Indian Tribe of Wisconsin
v. Thompson, 161 F.3d 449, 454 (7th Cir. 1998)(“The doctrine thereby bars a party from obtaining
two separate litigation victories, or a ‘double recovery,’ by asserting opposite legal or factual
contentions in two separate legal actions based on the same underlying facts.”). It may be
gamesmanship on the plaintiff’s part, and seemingly opportunistic changes in position may raise
some concern about underlying motivation especially since there is no explanation for the
disappearance of his quantum meruit claim for his stock option release in the Southern District
litigation – but judicial estoppel is inapplicable here. Kimbrell v. Brown, 651 F.3d 752, 757 (7th Cir.
2011).
C.
NIIT’s Asset Purchase Agreement With Cognitive Arts
Beyond judicial estoppel, NIIT points out that it was not a party to the Joint Venture
Agreement between Cognitive Arts and Economist’s Advocate, and merely because it purchased
Cognitive Arts’ assets, NIIT argues, it is not responsible for its contractual obligations.
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The general rule, in Illinois as elsewhere, is that even a purchase of all of a corporation's
assets does not carry with it the assumption of the corporation's liabilities. Oxxford Clothes XX, Inc.
v. Expeditors Intern. of Washington, Inc., 127 F.3d 574, 578 (7th Cir. 1997); E.E.O.C. v. G-K-G, Inc.,
39 F.3d 740, 747 (7th Cir. 1994). And that principle applies “even if all the assets are transferred by
the sale so that in effect the entire business has been sold, and the purchaser intends to continue it
as a going concern.” E.E.O.C., 39 F.3d at 747.
There are some exceptions to this general rule which, if applicable, can result in a successor
corporation like NIIT facing liability. They are: (1) where there is an express or implied agreement
of assumption; (2) where the transaction amounts to a consolidation or merger of the purchaser or
seller corporation; (3) where the purchaser is merely a continuation of the seller; or (4) where the
transaction is for the fraudulent purpose of escaping liability for the seller's obligation. Moriarty v.
Svec, 164 F.3d 323, 327 (7th Cir. 1998); Diguilio v. Goss Intern. Corp., 389 Ill.App.3d 1052, 106064, 906 N.E.2d 1268, 1276-79 (1st Dist. 2009).

NIIT addresses all four exceptions in its

memorandum in support of its motion for summary judgment, but does so in just a single paragraph
of a few brief sentences.
First, there is the question of whether NIIT expressly or impliedly agreed to assume
Cognitive Arts’ responsibilities. NIIT points out that the Asset Purchase Agreement between it and
Cognitive Arts “expressly excludes the assumption of any agreement between Cognitive Arts and
either Economist’s Advocate or Insead, . . . .” (NIIT’s Memorandum of Law, at 11-12). NIIT finds
support for this conclusion in the schedule of excluded assets attached to the Asset Purchase
Agreement. (NIIT’s Memorandum of Law, at 12). But that schedule lists, not “any agreement
between Cognitive Arts and either Economist’s Advocate or Insead,” as NIIT suggests, but

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“[a]greements with Insead and Economist’s Advocate.” (Pl.Rsp., Ex. 9, Schedule 1.2 (emphasis
supplied)).
If NIIT had wanted to draft an exclusion for agreements with Economist’s Advocate or
Insead, it could have easily done so. Ordinarily:
the words “and” and “or” are not interchangeable terms. On the contrary, those
words are used in the structure of the English language for entirely different
purposes; “and” is strictly of a conjunctive nature and “or” is strictly of a disjunctive
nature. . . . The substitution of these words is never resorted to except for strong
reasons, and the words should never be so construed unless the context favors the
substitution.

Perkins & Will v. Security Ins. Co. of Hartford, 219 Ill.App.3d 807, 813-814, 579 N.E.2d 1122, 112,
(1st Dist. 1991)(citations and quotations omitted). NIIT doesn’t refer to any case law on contract
construction; it merely offers a conclusory, unsupported argument for summary judgment. But such
an argument fails. Argyropoulos v. City of Alton, 539 F.3d 724, 738 (7th Cir. 2008). It is not the
court’s job to develop and/or support arguments on behalf of the parties. Fabriko Acquisition
Corporation v. Prokos, 536 F.3d 605, 609 (7th Cir. 2008).
Moreover, given the context surrounding the drafting of the Asset Purchase Agreement, the
parties were well aware that special care ought to be taken in delineating excluded assets. There
was, of course, Cognitive Art’s agreement with Economist’s Advocate. And, there was, of course,
Cognitive Art’s agreement with Insead and Economist’s Advocate – which happened to be the
wording employed in the exclusion schedule.
Perhaps sensing that its terse and conclusory argument was unpersuasive, NIIT went a bit
further in its reply brief. But that would have been too little, too late – as reply briefs are for
replying, not for developing positions that ought to have been developed in the first instance, Tellabs

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Operations, Inc. v. Fujitsu Ltd., 283 F.R.D. 374, 379 (N.D.Ill. 2012)(collecting cases) – had plaintiff
argued that this point was waived. It did not do so. Instead, it sought leave to file a surreply. Thus,
the waiver argument that could have been advanced was, itself, waived. Id. See generally, Nunez
v. United States, 546 F.3d 450, 452 (7th Cir. 2008).
NIIT’s first argument in its reply brief is that “Schedule 1.1(b) of the Asset Purchase
Agreement, entitled, ‘Assigned Contracts,’ makes no mention of any agreement with Economist’s
Advocate and/or Dr. Krepps, much less the [Joint Venture Agreement ] at issue here.” (NIIT’s Reply
Brief, at 8). But it didn’t have to. Article 1.1, titled “Assets to be Acquired,”stated that NIIT agreed
to purchase from Cognitive Arts:
all right, title and interest of [Cognitive Arts] in and to all of the tangible and
intangible assets of Seller used in the Business (other than the Excluded Assets (as
defined in Section 1.2)), . . . including, without limitation, those line items reflected
on [Cognitive Arts’] balance sheet dated as of September 30, 2002 and the
following..

(Pl.Rsp., Ex. 9, Article 1.1 (emphasis supplied)). The reference to Schedule 1.1(b) followed that
introduction, but the use of the phrase “including without limitation” plainly reflects the parties’
intent that the list was not intended to be exclusive or exhaustive. Dunkin' Donuts Inc. v. Barr
Donut, LLC., 242 F.Supp.2d 296, 309 (S.D.N.Y. 2003); Shugrue v. Continental Airlines, 977
F.Supp. 280, 285–86 (S.D.N.Y.1997).
NIIT’s reply brief next recast its judicial estoppel theory, arguing that because Economist’s
Advocate pleaded that it released the stock option rights it had under the Joint Venture Agreement,
that meant there was no longer any agreement between Economist’s Advocate and Cognitive Arts
that did not involve Insead. (NIIT’s Reply Brief, at 8). But, as already discussed, that’s not what the
case ended up being about – that claim changed into one for the value of services rendered.
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Moreover, Economist’s Advocate also pleaded that there was a three-party agreement among itself,
Cognitive Arts, and Insead. (Def.St., Ex. A, ¶¶ 11-12). In other words, the agreement Cognitive
Arts had “with Insead and Economist’s Advocate.” (Pl.Rsp., Ex. 9, Schedule 1.2 (emphasis
supplied)).
NIIT then turns back to Schedule 1.2, pointing to the item: “Contracts with ISS, University
of Washington, GE India and associated receivables and liabilities.” NIIT’s argument goes this way:
According to [plaintiff’s] reading of the agreement, that would mean that only
multiparty agreements among Cognitive Arts and ISS, and the University of
Washington, and GE India were excluded, while any bilateral contract between
Cognitive Arts and either ISS, or University of Washington, or GE India were being
assigned. But that is plainly not what the contracting parties intended. Rather, as can
be seen in Schedules 1.1(b) and 4.16 to the Asset Purchase Agreement, no bilateral
contract between Cognitive Arts and any of these individual entities was listed as
being “assigned”; to the contrary, contracts with either ISS or the University of
Washington were specifically listed as “not being assigned.” (See Asset Purchase
Agreement at Schs. 1.1(b) & 4.16 (emphasis supplied).)

This might be the best argument NIIT raises, but the presentation of it is so skeletal, so breezy, one
cannot say with any confidence that it entitles NIIT to summary judgment on this Count. It seems
that NIIT is saying there is no possible way there could be a 4-way agreement. Clearly there could
be such a thing, because, after all, there was a 3-way agreement, at least putatively. NIIT, as it did
in its opening brief, simply leaves too much to the imagination and to speculation.
NIIT’s reference to Schedule 4.16 raises some problems with its position. While the
schedule does list individual contracts with ISS and with the University of Washington as “not being
assigned,” it does not list an individual contract with GE India as “not being assigned.” So what
happened to the purported individual contract with GE India? If, as NIIT says, the entry, “Contracts
with ISS, University of Washington, GE India and associated receivables and liabilities,” refers to

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individual contracts with those three entities, and those individuals contract are excluded – i.e., “not
being assigned”, where is the “not being assigned” entry for the GE India contract on Schedule 4.16?
Second, Schedule 4.16 lists a contract Cognitive Arts had with Economist’s Advocate,
adding “Note this agreement is in litigation – please refer to litigation schedule,”and puts it in the
category of assignable. Presumably, this meant that, depending on the outcome of that litigation,
the contract would fall into the assigned category or would be invalid. So that would mean the Joint
Venture Agreement was assignable, while – according to the wording of Schedule 1.2 – the threeparty contract covering the release of the stock option was excluded from the asset purchase. This
suggests the opposite of NIIT’s rather conclusory position. (NIIT’s Reply, at 10 (“the Letter
Agreement [the Joint Venture Agreement ] was excluded from Cognitive Arts’ sale of its assets to
NIIT.”).
The terms of the asset purchase agreement provide further confusion. Oddly, the “agreement
in litigation” in the New York case was the one purportedly among Cognitive Arts, Insead, and
Economist’s Advantage – the termination agreement – not the original Joint Venture Agreement –
which was between just Cognitive Arts and Economist’s Advocate. (Dkt. 43-3, ¶¶ 11-12, 23-26,
31). Again, that’s the three-party agreement, not an agreement between just Cognitive Arts and
Economist’s Advantage, which is listed in Schedule 4.16 as being in litigation and assignable.
Finally, NIIT points to line nine of Schedule 1.2 – the roster of excluded assets – which lists
“any of [Cognitive Arts’] Contracts which are not Assigned Contracts, unless specifically assumed
by [NIIT] pursuant to Section 3.3(b) of the Asset Purchase Agreement.” It argues that in Article
1.1(b) “Assigned Contracts” are specifically defined as contracts listed on the Schedule of Assigned

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Contracts, Schedule 1.1(b), and Cognitive Arts’ Joint Venture Agreement with Economist’s
Advocate is not listed. (NIIT’s Reply, at 10). Article 1.1(b) reads:
[Cognitive Arts’] executory contracts with respect to the Business to the extent
assignable (the “Assigned Contracts”) on Schedule 1.1(b), together with all
confidentiality, noncompetition and nonsolicitation covenants running in favor of
[Cognitive Arts] set forth on Schedule 1.1(b).

So, actually, Article 1.1(b) defines “Assigned Contracts” as “[Cognitive Arts’] executory contracts
with respect to the Business to the extent assignable.” As already noted, Cognitive Arts’ agreement
with Economist’s Advocate is listed as “assignable” on Schedule 4.16. The definition of “Assigned
Contracts”, then, does not require them to be on Schedule 1.1(b). The wording of article 1.1(b) –
and the imposition of the parenthetical prior to the reference to Schedule 1.1(b) allows for some
assignable contracts to be listed in Schedule 1.1(b) and some to not be.
In the end, NIIT’s arguments regarding the wording of its Asset Purchase Agreement with
Cognitive Arts do not resolve questions so much as they raise them. It may be due to the
draftsmanship of the Asset Purchase Agreement, or the skeletal approach of NIIT’s rather skeletal
briefs, or its paraphrasing of the Asset Purchase Agreement’s terms rather than focusing on its actual
wording. But the fact remains that NIIT has not met its initial burden of showing that summary
judgment is appropriate on the question of whether no exceptions to the general rule against
successor corporate liability apply here. See Celotex, 477 U.S. at 323; Logan, 96 F.3d at 978. As
such, the remaining three exceptions need not be addressed and NIIT’s motion must be denied.

DATE: 6/12/13

ENTERED:_____________________________
UNITED STATES MAGISTRATE JUDGE
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