Clinical Technology, Inc. v. Oridion Capnography, Inc. et al

Filing 85

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The defendant's motion for summary judgment (Docket No. 66 ) is ALLOWED in part and DENIED in part. The motion for summary judgment on CTIs breach of contract claim (Count I) with resp ect to the IDN customers and Sparrow Health, CTIs unjust enrichment claim (Count III), and the negligent misrepresentation claim (Count V) is ALLOWED. The motion for summary judgment on CTIs breach of contract claim (Count I) with respect the eight end users that had supply agreements directly with CTI, CTIs claim for breach of the implied covenant of good faith and fair dealing (Count II), and violations of Chapter 93A, § 11 (Count VI) is DENIED. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
)
)
Plaintiff,
)
)
v.
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)
COVIDIEN SALES, LLC,
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)
Defendant.
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___________________________________)
CLINICAL TECHNOLOGY, INC.,

Civil Action
No. 14-12169-PBS

MEMORANDUM AND ORDER
June 16, 2016
Saris, C.J.
INTRODUCTION
Plaintiff Clinical Technology, Inc. (CTI), is a specialty
distributor of medical products in the Midwest. CTI brings this
action against Defendant Covidien Sales, LLC, alleging breach of
contract (Count I), breach of the implied covenant of good faith
and fair dealing (Count II), unjust enrichment (Count III),
negligent misrepresentation (Count V), and violations of
Massachusetts General Laws Chapter 93A, § 11 (Count VI).1 The
claims all arise from Covidien’s termination of a written
distribution agreement, under which CTI sold Oridion

1

The plaintiff alleged tortious interference with contractual
relations in the complaint (Count IV), but withdrew this claim
in its opposition to the present motion.
1

Capnography, Inc., products from 2008 to 2013. CTI first entered
into the distribution agreement with Oridion in June 2008. In
June 2012, Covidien acquired Oridion, and became the successorin-interest to the distribution agreement.
Roughly eight months later, in February 2013, Covidien
notified CTI that it was exercising its contractual right to
terminate the agreement. The termination had an effective date
of March 31, 2013. The parties agree that § 15 of the
distribution agreement gave Covidien the right to terminate the
agreement, but dispute the meaning of other termination
provisions. Covidien now moves for summary judgment on the
ground that the contract language is unambiguous.
CTI argues that § 15(d) of the distribution agreement
obligated Covidien to continue selling products to CTI after
termination so that CTI could sell such products to specific end
users, which had fixed-term contracts, for the duration of those
end-user agreements. CTI also alleges that Covidien engaged in
deceptive practices surrounding contracts it signed directly
with some of CTI’s customers. Covidien responds that there are
no genuine disputes of material fact as to the meaning of the
agreement because it states that Covidien, not CTI, is entitled
to sell directly to end users upon termination. Covidien further
maintains that there is no evidence of unfair or deceptive

2

conduct. The Court ALLOWS in part and DENIES in part the Motion
for Summary Judgment for the reasons that follow.
UNDISPUTED FACTS
With all reasonable inferences drawn in favor of the
nonmoving party, CTI, the following facts are not in dispute,
except where noted.
I.

The Distribution Agreement
Oridion Capnography, Inc. sold noninvasive ventilation

monitoring equipment and products. Oridion’s relationship with
CTI began in 2004, when the parties entered a prior contract for
CTI to distribute Oridion products from October 20, 2004 to June
11, 2008. In late 2007, Oridion presented CTI with a new, form
distribution agreement, which required CTI to make some up-front
investments. For example, it required CTI to invest in clinical
employees to train end users on the monitoring equipment Oridion
and CTI sold.
CTI President, Dennis Forchione, was initially reluctant to
sign the new agreement because he was concerned that the
contract did not provide sufficient protection for such
investments in the event Oridion later terminated the agreement.
Section 15(a)(ii) of the agreement granted Oridion the right to
terminate the agreement “immediately upon delivery of written
notice to Distributor: (x) if there shall be a ‘Change of
Control’ of the Company or any of its parent entities; or (y)
3

the Company, in its sole discretion, determines to engage in a
direct sales effort in the Territory.” Draft Agreement, Docket
No. 68, Ex. 8, at 16. Section 15(c) outlined the compensation
CTI would receive if Oridion terminated the agreement:
In the event of a termination of this Agreement pursuant
to Sections 15(a)(ii), the Company hereby agrees to pay
Distributor an amount equal to 5% of the net revenue
collected by Company attributable to sales of Products
in the Territory during the 12 month period immediately
prior to such termination (as determined by the Company
in its sole discretion) and shall not owe Distributor
any other compensation whatsoever.
Id. Mr. Forchione approached Oridion’s President, Gerald
Feldman, about Forchione’s concerns with these provisions, and
suggested adding a provision that would have required Oridion to
pay CTI a “buyout” or its “lost profit” after termination.
Forchione Dep., Docket No. 74, Ex. B, at 44-49. Mr. Feldman
rejected this suggestion, and after further negotiations, the
parties ultimately agreed upon a separate change to § 15.
Section 15(d) of the new agreement originally stated:
Should the Company choose to terminate this Agreement,
the Company shall be obligated to honor those agreements
between Distributor and end-users of Company Products
provided for by this Agreement until the next
anniversary of the Agreement after termination, and
shall sell Products to such Hospitals, ambulatory
surgery centers, outpatient surgery centers and EMS
Environments at established Oridion ODN Prices.
Draft Agreement, Docket No. 68, Ex. 8, at 16 (emphasis added).
The final version of § 15(d) that the parties signed states:

4

Should the Company choose to terminate this Agreement,
the Company shall be obligated to honor those agreements
between Distributor and end-users of Company Products
provided for by this Agreement until the termination of
Distributor’s agreements with end-users, and shall sell
Products to such Hospitals, ambulatory surgery centers,
outpatient surgery centers and EMS Environments at
established Oridion ODN Prices.
Amended and Restated Distribution Agreement, Docket No. 74, Ex.
E, at 15.
According to CTI, Mr. Forchione’s intent in negotiating the
change to § 15(d) was to allow CTI to continue to supply end
users until the end of their contracts’ terms in the event
Oridion terminated the distribution agreement. Such an
arrangement would “protect CTI’s investments on an account-byaccount basis post-termination” by requiring Oridion to sell
products to CTI that CTI would then sell to the end users until
expiration of the end-user contracts. Docket No. 75, at 3. In
signing the 2008 distribution agreement, Mr. Forchione
highlighted and initialed the change to § 15(d) in order to draw
attention to the revised language.
The parties did not change the above-quoted language in
§ 15(a)(ii) or § 15(c) in the final 2008 distribution agreement.
Thus, Oridion maintained the right to terminate the agreement
“to engage in a direct sales effort” in CTI’s territory, and the
final agreement states that in the event of such a termination,
Oridion would not owe CTI any compensation beyond “an amount

5

equal to 5% of the net revenue collected by [Oridion]
attributable to sales of Products in the Territory during the 12
month period immediately prior to such termination.” Amended and
Restated Distribution Agreement, Docket No. 74, Ex. E, at 14-15.
The final agreement also included a clause specifying that § 15
would survive termination. Id. at 15.
Under the agreement, CTI was the exclusive distributor for
some Oridion products, such as “filterlines,”2 in the Midwest
from June 2008 until April 2013. CTI purchased products from
Oridion at one price, and then sold them to its customers, the
end users, at a mark-up. Section 8(b) of the agreement required
CTI to use “its best efforts to actively promote sales” of
Oridion products within its defined territory. Id. at 9. The
initial contract term was for two years, with automatic renewal
periods thereafter, unless Oridion provided CTI with notice of
non-renewal ninety days prior to end of the previous term.
Section 1(g) of the distribution agreement defines the term
“Oridion ODN Price” used in § 15(d) as “the Oridion ODN price as
listed in the Oridion Pricing Handbook.” Id. at 5. The parties
agree that this definition refers to the discounted price at
which distributors, like CTI, purchased product from Oridion,
sometimes called the distributor or wholesale price. The parties

2

Filterlines are tubing for noninvasive monitoring of a
patient’s carbon dioxide levels.
6

further agree that Oridion/Covidien would not, and did not, sell
product to end users at this distributor price, despite the fact
that the agreement states that in the event of termination,
Oridion/Covidien “shall sell” products to end users “at
established Oridion ODN Prices.” Id. at 15. The parties dispute
whether the parties intended “Oridion ODN Price” in § 15(d) to
mean the distributor price, as the § 1(g) definition would
require, or instead intended it to mean the price that CTI was
charging its end users at the time of the agreement’s
termination. Finally, the agreement also contained a merger
clause in § 17(e):
This agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and
supersedes and cancels all prior agreements, claims,
representations, and understandings of the parties in
connection with such subject matter, including, but not
limited to, Non-Exclusive Distributor Agreement, October
20, 2004, which has been amended and restated hereby.
Except as otherwise expressly provided above, this
Agreement shall not be modified or amended except by
written
agreement
signed
by
duly
authorized
representatives of each of Distributor and the Company.
Id. at 16.
II.

Integrated Delivery Network Agreements
Oridion (and later Covidien) and CTI amended their

agreement multiple times over the course of its five-year
duration to account for pricing agreements with certain end
users, who signed Integrated Delivery Network (IDN) contracts
directly with Oridion/Covidien. An IDN is a group of hospitals
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or other end users with consolidated purchasing; by
consolidating, the group can obtain better leverage in
negotiating prices and services. CTI alleges that the IDNs at
issue in this case were all pre-existing CTI customers. Covidien
admits that at least some of the IDN end users were pre-existing
customers of CTI, but contends that some of the IDN contracts
spanned multiple territories and involved IDN facilities that
CTI had not sold to before.
Although CTI was not a party to the IDN contracts, CTI
helped to negotiate and approved the pricing in the IDN
contracts. CTI was also named as the exclusive distributor in
the IDN contracts, and, thus, continued to sell products to the
IDNs after they signed contracts with Oridion/Covidien. Oridion
began entering into IDN contracts directly with CTI customers
roughly two years after signing the 2008 Oridion-CTI
distribution agreement. The IDN contracts typically contained
three-year terms. Each time Oridion/Covidien entered into an IDN
contract, CTI and Oridion/Covidien amended the distribution
agreement by adding a one-page document outlining the price to
be charged to both CTI and the IDN end user based on the new IDN
agreement.
Ten of the nineteen end users at issue in this case had IDN
contracts with Oridion/Covidien. Eight of the remaining nine end
users are hospitals or hospital groups that had supply
8

agreements with CTI covering Oridion products, but did not have
contracts directly with Oridion/Covidien. The parties dispute
whether the end user Sparrow Health had finalized an IDN
contract by the time Covidien terminated its distribution
agreement with CTI. CTI asserts that Sparrow Health told CTI
days before termination that the IDN contract had been
finalized, but CTI does not have a signed copy of the agreement.
III.

Termination
In April 2012, an Oridion employee, Tom Millonig, informed

CTI and other Oridion distributors that an affiliate of Covidien
had agreed to acquire Oridion. The acquisition closed in June
2012, at which point Covidien Sales, LLC, became the successorin-interest to the 2008 Oridion-CTI distribution agreement.
Approximately eight months later, in February 2013, Covidien
sent CTI written notice of its decision to terminate the
agreement, pursuant to § 15(a)(ii), “to engage in a direct sales
effort” in CTI’s territory. Amended and Restated Distribution
Agreement, Docket No. 74, Ex. E, at 14. Covidien credited “5% of
the net revenue collected by [Oridion/Covidien] attributable to
sales of Products in the Territory during the 12 month period
immediately prior to such termination,” to CTI, in accordance
with the termination-fee provision in § 15(c). Id. at 15.
CTI responded to the termination notice through outside
counsel on March 21, 2013, asserting that it expected Covidien
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to continue shipping products to CTI under § 15(d) so that CTI
could fulfill the end-user agreements through their respective
termination dates. Covidien’s counsel responded that it
interpreted § 15(d) to mean that Covidien, not CTI, would
fulfill the end-user agreements upon termination of the 2008
Oridion-CTI distribution agreement. The termination took effect
on March 31, 2013, and Covidien began its direct sales effort on
April 1, 2013.
DISCUSSION
I.

Summary Judgment Standard
Summary judgment is appropriate when there is “no genuine

issue as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). To succeed
on a motion for summary judgment, the moving party must
demonstrate that there is an “absence of evidence supporting the
nonmoving party’s case.” Sands v. Ridefilm Corp., 212 F.3d 657,
660 (1st Cir. 2000) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986)). Once such a showing is made, the burden shifts
to the nonmoving party, who must, with respect to each issue on
which it would bear the burden of proof at trial, come forward
with facts that demonstrate a genuine issue. Borges ex rel.
S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010) (citing
Celotex, 477 U.S. at 324); Sensing v. Outback Steakhouse of
Fla., LLC, 575 F.3d 145, 152-53 (1st Cir. 2009).
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“A genuine issue exists where a reasonable jury could
resolve the point in favor of the nonmoving party.” Meuser v.
Fed. Express Corp., 564 F.3d 507, 515 (1st Cir. 2009) (internal
quotation marks and citations omitted). “A party cannot survive
summary judgment simply by articulating conclusions the jury
might imaginably reach; it must point to evidence that would
support those conclusions.” Packgen v. BP Expl., Inc., 754 F.3d
61, 67 (1st Cir. 2014). A material fact is “one that has the
potential of affecting the outcome of the case.” Calero–Cerezo
v. U.S. Dep’t of Justice, 355 F.3d 6, 19 (1st Cir. 2004).
In its review of the evidence, the Court must examine the
facts in the light most favorable to the nonmoving party, and
draw all reasonable inferences in its favor, to “determine if
there is sufficient evidence favoring the nonmoving party for a
jury to return a verdict for that party.” Sands, 212 F.3d at 661
(internal quotation marks omitted). The Court must ignore
“conclusory allegations, improbable inferences, and unsupported
speculation” at the summary judgment stage. Chiang v. Verizon
New England Inc., 595 F.3d 26, 30 (1st Cir. 2010). “Ultimately,
credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from the facts are jury
functions, not those of a judge.” Sensing, 575 F.3d at 163
(quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 150 (2000)).
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II.

Breach of Contract
A. Legal Standard
CTI claims that Covidien breached § 15(d) of the 2008

Oridion-CTI distribution agreement by selling products directly
to nineteen specific end users, after terminating the agreement
in March 2013. To interpret the 2008 distribution agreement, the
Court must first assess whether the contract at issue is
ambiguous, a question of law in Massachusetts. Barclays Bank PLC
v. Poynter, 710 F.3d 16, 21 (1st Cir. 2013). The Court bases
this determination on an examination of the contract’s plain
text, “independent of extrinsic evidence concerning the drafting
history or intention of the parties.” Id. (quoting Bank v.
Thermo Elemental Inc., 888 N.E.2d 897, 907 (Mass. 2008)).
“Language is only ambiguous ‘if it is susceptible of more
than one meaning and reasonably intelligent persons would differ
as to which meaning is the proper one.’” Id. (quoting Lass v.
Bank of Am., N.A., 695 F.3d 129, 134 (1st Cir. 2012)); see also
Farmers Ins. Exch. v. RNK, Inc., 632 F.3d 777, 783 (1st Cir.
2011) (noting “a contract is only ambiguous where an agreement’s
terms are inconsistent on their face or where the phraseology
can support reasonable differences of opinion as to the meaning
of the words employed and obligations undertaken” (internal
quotation marks and citations omitted)). A contract is not

12

ambiguous just because the parties disagree about its meaning.
Barclays, 710 F.3d at 21 (citing Farmers Ins., 632 F.3d at 783).
If the contract is found free from ambiguity, the Court
must interpret it according to its plain terms, taking “the
words within the context of the contract as a whole, rather than
in isolation.” Barclays, 710 F.3d at 21. “Summary judgment is
appropriate when those plain terms unambiguously favor either
side.” Farmers Ins., 632 F.3d at 784. “On the other hand, if the
contract’s terms are ambiguous, contract meaning normally
becomes a matter for the factfinder, and summary judgment is
appropriate only if the extrinsic evidence presented about the
parties’ intended meaning is so one-sided that no reasonable
person could decide to the contrary.” Id.; see also Mason v.
Telefunken Semiconductors Am., LLC, 797 F.3d 33, 38 (1st Cir.
2015) (“But if the extrinsic evidence bearing on the meaning of
the relevant language is ‘contested or contradictory,’ summary
judgment will not lie.” (quoting Allen v. Adage, Inc., 967 F.2d
695, 703 n.3 (1st Cir. 1992))).
B. The Plain Text of § 15(d)
Here, Covidien argues that there is no genuine dispute of
material fact with respect to CTI’s breach of contract claim,
and that Covidien is entitled to judgment as a matter of law,
because the plain language of the agreement unambiguously grants
Covidien the right to sell to end users upon termination. In the
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alternative, Covidien argues that even if the language is
ambiguous, the extrinsic evidence is so one-sided that no
reasonable jury could find in CTI’s favor. CTI responds that
five phrases in § 15(d) introduce ambiguity with respect to
which party is entitled to sell to the end users after
termination, such that summary judgment is not appropriate,
including: “honor those agreements,” “provided for by this
Agreement,” “Distributor’s agreements with end-users,” “and
shall sell,” and “Oridion ODN Prices.” Docket No. 75, at 9.
First, CTI maintains that the language requiring Covidien
to “honor those agreements” between CTI and the end users is
ambiguous because Covidien could “honor” them either by
maintaining CTI’s role as the exclusive distributor, or by
honoring the price and other terms contained within the end-user
agreements, while serving as the distributor itself. According
to CTI, the better interpretation of “honor” is to require
Covidien to uphold all of the terms within the end-user
contracts, including the term that lists CTI as the distributor.
Meanwhile, Covidien cites to the dictionary definition of
“honor,” which is “to do what is required by (something, such as
a promise or a contract),” to support its argument to the
contrary. Docket No. 67, at 7 (quoting the Online MerriamWebster Dictionary). Covidien maintains that because it is the
party with the contractual obligation to “honor” the agreements,
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it must also be the party that does what they require, including
selling Oridion products to the end users itself after
termination.
Next, CTI argues that the phrase “provided for by this
Agreement” in § 15(d) is ambiguous because it could modify
either the entire preceding clause, “those agreements between
Distributor and end-users of Company Products,” or just the last
antecedent, “Company Products.” CTI maintains that it modifies
the entire preceding clause, and thus encompasses all the IDN
agreements “provided for” in amendments to the 2008 distribution
agreement. Remember that each time Oridion/Covidien entered into
an IDN contract with an end user, CTI and Oridion/Covidien
amended the 2008 agreement to incorporate the pricing in the new
IDN contract.
Covidien responds that even if the phrase “provided for by
this agreement” modifies the entire preceding clause, CTI’s
interpretation is untenable because the IDN agreements are not
“between” CTI and the end users. Instead, they are between
Oridion/Covidien and the end users. Covidien further contends
that this purported ambiguity is not material because it does
not relate to which party has the right to sell Oridion products
to the end users after termination.
Relatedly, CTI asserts that the language “Distributor’s
agreements with end-users” is ambiguous because it does not
15

specify “whether it is a prerequisite for CTI to be a party to
an agreement . . . or whether CTI named in an agreement as the
distributor is sufficient.” Docket No. 75, at 10 (emphasis in
original). CTI emphasizes that it was not necessary for the
parties to clarify this issue when the parties signed the
amended distribution agreement in 2008 because the parties did
not begin using IDN agreements with end users until 2010. CTI
cites to the fact that Covidien honored the price terms in the
IDN agreements after termination as proof of Covidien’s
agreement with CTI’s interpretation of this phrase—that it
includes the IDN agreements. Covidien retorts that it complied
with the IDN agreements’ pricing terms because it was
contractually obligated to do so under the IDN agreements, and
not under the 2008 distribution agreement with CTI.
Next, CTI contends that “and shall sell” is ambiguous
because, if Covidien truly honors the end-user agreements, then
CTI must be the party to sell the product to the end users.
Covidien counters that Covidien is clearly the subject of the
verb “shall sell,” and Covidien can honor the agreements by
selling Oridion products to the end users in accordance with all
the other terms of their agreements, such as pricing and
shipping fees. In short, the parties’ arguments with respect to
the phrase “and shall sell” repeat their dispute over the
meaning of the word “honor.”
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Finally, the parties contest the ambiguity and meaning of
“established Oridion ODN Prices.” Section 1(g) of the contract
defines the term “Oridion ODN Price” as “the Oridion ODN price
as listed in the Oridion Pricing Handbook.” Amended and Restated
Distribution Agreement, Docket No. 74, Ex. E, at 5. The parties
agree that this definition refers to the discounted price at
which distributors, like CTI, purchased product from Oridion,
sometimes called the distributor or wholesale price. The parties
also both acknowledge that neither CTI nor Covidien would sell
products to the end users at this price.
CTI argues, however, that this phrase still refers to the
defined term, and is evidence of the parties’ intent for
Covidien to sell to CTI at this price, and CTI to then sell to
the end users. In contrast, Covidien maintains that “the only
rational interpretation of § 15(d) entails construing [this
phrase] to mean the price ultimately charged to the end-user by
CTI.” Docket No. 78, at 5. Again, Covidien asserts any ambiguity
is immaterial because it relates to the price, as opposed to
which party shall sell the product to end users upon
termination.
As a preliminary matter, the Court rejects Covidien’s
arguments that any ambiguity with respect to the phrases
“agreements between Distributor and end-users of Company
Products provided for by this Agreement” and “established
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Oridion ODN Prices” is immaterial. The issues of what agreements
the contract requires Covidien to “honor” upon termination, and
what price the Oridion products must be sold at, shed light on
the central question of which party is entitled to continue
selling Oridion products to customers until the termination of
the end-user agreements. Given that the Court must interpret the
contract as a whole, these issues have “the potential of
affecting the outcome of the case,” and are thus material.
Calero–Cerezo, 355 F.3d at 19.
Considering the plain language of § 15(d) in context, I
find that the 2008 distribution agreement is ambiguous with
respect to which party is entitled to sell Oridion products to
some of the end users upon termination. The phrase “honor those
agreements” is ambiguous because “it is susceptible of more than
one meaning and reasonably intelligent persons would differ as
to which meaning is the proper one.” Barclays, 710 F.3d at 21.
Both interpretations advanced by the parties are plausible based
on the dictionary definition of the word “honor.” This phrase
could mean either that Covidien is required to sell the products
to the end users directly, in accordance with the pricing and
shipping terms of the end-user agreements, or that Covidien is
required to keep CTI as the distributor.
Furthermore, the use of the defined term “Oridion ODN
Prices” is inconsistent on its face with the rest of § 15(d).
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See Farmers Ins., 632 F.3d at 783. The parties agree that
neither CTI nor Covidien would sell to the end users at the
wholesale price, as use of the defined term would require. To do
so would seemingly conflict with the obligation that Covidien
“honor” the end-user agreements, which contain their own pricing
terms. Thus, the meaning of “Oridion ODN Prices” is also
ambiguous in the context of § 15(d).
However, the phrases “agreements between Distributor and
end-users of Company Products provided for by this Agreement”
and “Distributor’s agreements with end-users” are not
susceptible of more than one reasonable interpretation. CTI
admits that it was not a party to the IDN agreements, even
though it helped to negotiate the price terms in said
agreements, and it continued to serve as the distributor for
some period thereafter. These end-user agreements are not
“agreements between Distributor and end-users of Company
Products” nor “Distributor’s agreements with end-users”
(emphasis added). Instead, they are agreements between Covidien
and the end users.
The Court finds that the 2008 distribution agreement
unambiguously grants Covidien, not CTI, the right to sell
Oridion products to the ten end users who signed IDN contracts

19

directly with Covidien.3 As discussed above, the distribution
agreement grants Covidien the right to terminate the agreement
immediately “to engage in a direct sales effort” in CTI’s
territory, as long as Covidien provides written notice to CTI.
Amended and Restated Distribution Agreement, Docket No. 74, Ex.
E, at 14. Covidien provided CTI with more than thirty-days
advance written notice, even though it could have terminated the
contract effective immediately. Irrespective of the ambiguity
surrounding the use of the phrases “honor those agreements” and
“established Oridion ODN Prices,” § 15(d) does not apply to the
IDN agreements to grant CTI the right to continue selling to the
end users until the termination of their contracts because CTI
is not a party to the IDN agreements.
However, the 2008 distribution agreement is ambiguous with
respect to whether Covidien or CTI had the right to continue
selling products to eight of the remaining end users, who had
supply agreements directly with CTI.4 The parties dispute whether
the final end user, Sparrow Health, had finalized an IDN

3

The ten end users with IDN contracts are CentraCare, Community
Health, Franciscan Alliance, HealthPartners, Indiana University
Health, the Mayo Clinic, Northern Michigan Supply Alliance,
Norton Healthcare, Ohio Health, and St. Elizabeth’s.
4 The eight end users who had supply agreements with CTI, and no
agreement directly with Oridion/Covidien, are Allina Hospitals,
Cleveland Clinic, Fairfield Medical Centers, Fairview Health
Services, Licking Memorial Hospital, Our Lady of Bellefonte
Hospital, Parkview Health Systems, and Summa Health.
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contract with Covidien by the time of termination. Given that
the IDN contracts are not agreements between CTI and the end
users, the parties hyperventilate unnecessarily with respect to
this issue. The dispute is immaterial. CTI has offered no
evidence that it had a separate supply agreement with Sparrow
Health, and, therefore, the 2008 distribution agreement also
unambiguously grants Covidien the right to sell to Sparrow
Health after termination. The Court allows Covidien’s motion for
summary judgment in part on CTI’s breach of contract claim with
respect to the ten end users who had IDN agreements directly
with Oridion/Covidien and Sparrow Health.
C. Extrinsic Evidence
In the alternative, Covidien argues that, even if the 2008
distribution agreement is ambiguous, the extrinsic evidence
about the parties’ intended meaning with respect to § 15(d) is
so one-sided that no reasonable jury could decide in CTI’s
favor. Covidien emphasizes that the only change the parties made
to the form distribution agreement Oridion presented to CTI in
2008 was to extend “the length of time for which Covidien must
honor the end-user agreements, from the anniversary date of the
Agreement to the termination date of the end-user agreements.”
Docket No. 67, at 8.
Covidien also contends that CTI considered asking for
“commissions” in the negotiations, which would have provided CTI
21

with the same economic benefits as continuing to serve as the
distributor until the termination of the end-user agreements.
Id. According to Covidien, CTI chose not to even ask for the
“commissions” because CTI believed that Oridion would not accept
such a proposal. Covidien points to a draft “Addendum to the
Distribution Agreement,” which CTI never presented to Oridion,
to support this argument.
The addendum was drafted by Dan Hyun, a business associate
and friend of CTI’s President, Mr. Forchione. Mr. Hyun advised
Mr. Forchione in some of the contract negotiations. Mr.
Forchione testified in his deposition that he doesn’t believe he
ever presented the addendum to Oridion because he thought it
would be “pushing the envelope.” Forchione Dep., Docket No. 74,
Ex. B, at 49. Given that the commissions would have provided CTI
with a similar economic benefit as allowing CTI to continue to
serve as the distributor, Covidien argues that CTI’s failure to
even present the commission proposal to Oridion is evidence that
Oridion would never have agreed to allow CTI to continue to
serve as the distributor for any of the end users after
termination of the 2008 distribution agreement.
CTI responds that the parties did more than extend the
length of time for which Covidien must honor the agreements in
changing the language in § 15(d). CTI points to the fact that
Mr. Forchione was originally reluctant to sign the 2008
22

distribution agreement “absent protection for his investments
and associated profits.” Docket No. 75, at 13. Mr. Forchione
sent Oridion’s President, Mr. Feldman, a letter to this effect
during the negotiations, and had a conversation with him about
his concerns. In response, Mr. Feldman instructed Oridion’s Vice
President of Global Sales, Tom Millonig, to make Mr. Forchione
“happy” and to get Mr. Forchione to sign the agreement. Feldman
Dep., Docket No. 74, Ex. A, at 43. In his subsequent discussions
with Mr. Millonig, Mr. Forchione explained how CTI had
distribution agreements with other manufacturers under which CTI
“was able to continue to sell the product” after termination of
the contracts. Millonig Dep., Docket No. 74, Ex. C, at 43-44.
CTI alleges that Mr. Forchione drafted the new language for
§ 15(d) based on his concerns, and emphasizes that Mr. Forchione
specifically initialed the change in the final signed 2008
distribution agreement to highlight it.
CTI also counters that Covidien’s reliance on the draft
addendum is a red herring because it was prepared by Dan Hyun,
and not anyone at CTI. Mr. Hyun had no role in drafting the
actual change to § 15(d) adopted by the parties. Furthermore,
the addendum addresses a commission, as opposed to an
arrangement whereby CTI would continue to sell Oridion products
to the end users until the termination of their contracts. CTI
argues that Mr. Forchione suggested an arrangement whereby CTI
23

would continue to serve as the distributor until the termination
of the end-user agreements, instead of asking for some form of
commission, because CTI knew that Oridion would not accept the
commission alternative.
The Court finds that this extrinsic evidence about the
parties intended meaning behind the change to § 15(d) is not “so
one-sided that no reasonable person could decide to the
contrary.” Farmers Ins., 632 F.3d at 784. The meaning of the
ambiguous contract terms “honor those agreements” and “Oridion
ODN Prices” in § 15(d) is therefore a question of fact for the
jury. I deny Covidien’s motion for summary judgment in part on
CTI’s breach of contract claim with respect to the meaning of
these phrases, and the eight end users who had supply agreements
with CTI at termination.
III. Breach of the Covenant of Good Faith and Fair Dealing
CTI argues that Covidien breached the implied covenant of
good faith and fair dealing in two instances: (1) in the
negotiations surrounding § 15(d) and Covidien’s “associated
failure to abide by the specifically negotiated terms” upon
termination, and (2) the measures Covidien took “to induce CTI
to promote the IDN Agreements to its customers knowing full well
that CTI would ultimately be terminated as the distributor under
the IDN arrangements.” Docket No. 75, at 15. Covidien contends
that CTI’s claim for breach of the implied covenant fails as a
24

matter of law because “it is either wholly redundant with the
contract claim or it would negate express contract terms.”
Docket No. 67, at 13. Covidien also maintains that any
statements made or actions taken during the negotiations with
respect to § 15(d) are inadequate for a breach of the implied
covenant because the covenant only applies to conduct that
occurs during contract performance, not pre-contract formation.
A. Legal Standard
“Under Massachusetts law, ‘every contract implies good
faith and fair dealing between the parties to it.’” Young v.
Wells Fargo Bank, N.A., 717 F.3d 224, 237-38 (1st Cir. 2013)
(quoting T.W. Nickerson, Inc. v. Fleet Nat’l Bank, 924 N.E.2d
696, 703–04 (Mass. 2010)). The implied covenant of good faith
and fair dealing provides that “neither party shall do anything
that will have the effect of destroying or injuring the right of
the other party to the fruits of the contract.” Id. (quoting
T.W. Nickerson, 924 N.E.2d at 704). In other words, “the parties
to a contract implicitly agree ‘to deal honestly and in good
faith in both the performance and enforcement of the terms of
their contract.’” Biltcliffe v. CitiMortgage, Inc., 952 F. Supp.
2d 371, 381 (D. Mass. 2013), aff’d, 772 F.3d 925 (1st Cir. 2014)
(quoting Hawthorne’s, Inc. v. Warrenton Realty, Inc., 606 N.E.2d
908, 914 (Mass. 1993)). “[T]he prohibition contained in the
covenant applies only to conduct during performance of the
25

contract, not to conduct occurring prior to the contract’s
existence, such as conduct affecting contract negotiations.”
AccuSoft Corp. v. Palo, 237 F.3d 31, 45 (1st Cir. 2001).
“A party may breach the covenant of good faith and fair
dealing implicit in every contract without breaching any express
term of that contract.” Massachusetts v. Schering-Plough Corp.,
779 F. Supp. 2d 224, 240 (D. Mass. 2011) (quoting Speakman v.
Allmerica Fin. Life Ins., 367 F. Supp. 2d 122, 132 (D. Mass.
2005)). However, “the requirement of good-faith performance
ultimately is circumscribed by the obligations—the contractual
‘fruits’—actually contained in the agreement.” AccuSoft, 237
F.3d at 45. “As a consequence, the implied covenant cannot
create rights and duties not otherwise provided for in the
existing contractual relationship, and instead focuses on the
manner of performance.” Young, 717 F.3d at 238 (internal
quotation marks and citations omitted). “Nor does the covenant
apply where the defendant has exercised an express contractual
power in good faith—that is, in a manner that comports with the
parties’ reasonable expectations as to performance.” Speakman,
367 F. Supp. 2d at 132.
The plaintiff bears the burden of presenting evidence to
demonstrate a lack of good faith, such as “a dishonest purpose,
conscious doing of wrong, or breach of duty through motive of
self-interest or ill will.” Young, 717 F.3d at 238. “Evidence
26

that a party behaved in a manner unreasonable under all the
circumstances may indicate a lack of good faith, but the core
question remains whether the alleged conduct was motivated by a
desire to gain an unfair advantage, or otherwise had the effect
of injuring the other party’s rights to the fruits of the
contract.” Id. (internal quotation marks and citations omitted).
When the claim of unfairness involves a contract’s termination,
the Court “should look at the consequences of the termination to
determine if it resulted in a deprivation of earnings, loss of
good will, or loss of investment, and if the plaintiff was
subject to unfair dealing.” Piantes v. Pepperidge Farm, Inc.,
875 F. Supp. 929, 938 (D. Mass. 1995) (internal quotation marks,
alterations, and citations omitted).
B. Analysis
Here, the Court agrees with Covidien that any conduct
surrounding the negotiation of § 15(d) is insufficient to
support CTI’s claim of breach of the implied covenant of good
faith and fair dealing because the covenant only applies to
conduct during contract performance. See AccuSoft, 237 F.3d at
45. The negotiation took place before the parties signed the
2008 distribution agreement.
However, CTI also alleges that Covidien breached the
covenant by repeatedly representing to CTI that it would remain
as “the exclusive distributor for its IDN customers for the
27

length of each IDN Agreement” during the course of performance,
both before and after Covidien made the decision to terminate
the agreement and engage in a direct sales effort. Docket No.
75, at 17. Several sales representatives from CTI testified at
their depositions that Dan McGuinness, Oridion’s Regional
Manager, and Carl Lowery, Covidien’s IDN Director, described the
IDN contracts as “annuities” for CTI that would protect CTI’s
business, should Oridion ever be bought or sold, because CTI was
named as the distributor in the IDN contracts. See, e.g., Farmer
Dep., Docket No. 74, Ex. I, at 30-35; Coyle Dep., Docket No. 74,
Ex. K, at 36-40. Carl Lowery could not specifically recall using
the word “annuity” at his deposition, but explained that it was
in Oridion’s, and later Covidien’s, “best interest” for the
distributors to “aggressively” grow the business through the IDN
contracts. Lowery Dep., Docket No. 74, Ex. F, at 56, 74.
Mr. Lowery also testified that he was instructed not to
share the terms of the IDN agreements, which stated that
Oridion/Covidien could assume the distributor’s obligations at
any time, with CTI. Id. at 64-65. Mr. Lowery could not recall
ever informing anyone at CTI about this provision. Id. at 66-67.
Ms. Farmer, a CTI employee, similarly testified that, when she
asked to see a copy of the IDN agreements, Mr. Lowery told her
that he was not permitted to show her. Farmer Dep., Docket No.
74, Ex. I, at 76-78.
28

CTI also points to an email from Mr. Millonig to several
Covidien employees on October 30, 2012, which states that
Covidien’s plan to go direct in April 2013 “is not broadly
publicized and I’m very concerned that this is being
communicated . . . . The growth of the [Oridion Distribution
Network] channel will be compromised if this information leaks.”
Docket No. 74, Ex. Q. In his deposition, Mr. Millonig explained
he that did not want Covidien’s plan to go direct to be shared
with distributors, such as CTI, because the distributors would
lose motivation to continue to sell: “[A]ny discussion about
going direct, when we had been working very hard to keep people
motivated moving forward and making money while we could,
including the [Oridion Distribution Network], would be a
problem.” Millonig Dep., Docket No. 74, Ex. C, at 96-97. Also in
October 2012, Covidien gave a PowerPoint presentation at an
annual meeting with its distributors, in which it described
Covidien and the distributors as “moving forward” together as
part of its “vision of the future.” Docket No. 74, Ex. P, at 6,
10. The presentation also describes the IDN contracts as
requiring business to “flow through” the distributors, such as
CTI. Id. at 20.
Construing the facts in the light most favorable to CTI,
and drawing all reasonable inferences in its favor, I deny
Covidien’s motion for summary judgment on CTI’s claim for breach
29

of the implied covenant of good faith and fair dealing. Although
Covidien did not violate § 15(d) of the contract by terminating
the 2008 distribution agreement and selling directly to the
IDNs, a party can breach the implied covenant without breaching
an express term of the contract. Massachusetts v. ScheringPlough Corp., 779 F. Supp. 2d at 240.
CTI had relationships with at least some, if not all, of
the IDN customers before they signed IDN contracts directly with
Oridion/Covidien. Mr. Lowery testified at his deposition that
CTI was “integral” in establishing the IDN contracts. Lowery
Dep., Docket No. 74, Ex. F, at 70. In some cases, the IDN
agreements replaced pre-existing pricing and supply agreements
between CTI and the IDN customers. Covidien admits that CTI may
have had lower margins and lower commissions under the “tiered
pricing” structure in the IDN agreements, compared to preexisting supply agreements. Docket No. 79, at 12. CTI has thus
met its burden to put forward evidence demonstrating a genuine
dispute of material fact over whether Covidien made
misrepresentations to CTI to gain an unfair economic advantage
through the IDN agreements, or otherwise deny CTI the fruits of
the 2008 distribution agreement.
IV.

Unjust Enrichment
CTI alleges that Covidien was unjustly enriched by CTI

selling the IDN agreements to its customers. As discussed above,
30

CTI played a critical role in establishing these contracts.
Covidien retorts that CTI’s unjust enrichment claim is precluded
because the 2008 distribution agreement expressly regulates the
parties conduct with respect to the IDN contracts. Covidien
emphasizes that the parties amended the 2008 distribution
agreement each time they negotiated a new IDN contract to
incorporate the price terms for that customer, including both
the price to be charged to CTI and the price to be charged to
the IDN end user.
“A claim for unjust enrichment generally cannot stand where
there is an existing, express contract, unless the contract is
not valid.” Philibotte v. Nisource Corp. Servs. Co., 793 F.3d
159, 167 (1st Cir. 2015); see also Zarum v. Brass Mill Materials
Corp., 134 N.E.2d 141, 143 (Mass. 1956) (“The law will not imply
a contract where there is an existing express contract covering
the same subject matter.”). This is because “a claim of unjust
enrichment is not available to a party with an adequate remedy
at law.” Ferreira v. Sterling Jewelers, Inc., 130 F. Supp. 3d
471, 487 (D. Mass. 2015) (internal quotation marks, alterations,
and citations omitted).
CTI does not challenge the validity of the 2008
distribution agreement. Instead, CTI cites to America’s Growth
Capital, LLC v. PFIP, LLC, 73 F. Supp. 3d 127, 153 n.192 (D.
Mass. 2014), for the proposition that unjust enrichment is
31

possible between two parties to a contract if one party acts
“outside of its contractual obligations to its detriment and the
other party’s benefit.” Docket No. 75, at 22. The Court agrees
with Covidien that CTI’s reliance on this case is misplaced.
The America’s Growth Capital court explained in a footnote
that where “a party accepts gratuitous services outside of a
contractual relationship,” the typical rule barring a claim for
unjust enrichment does not apply. 73 F. Supp. 3d at 153 n.192.
In America’s Growth Capital, the plaintiff “performed valuable
services for Planet Fitness that materially contributed to the
successful sale of the company” to a third party. Id. at 153.
The third party investment group, however, was not on an
enumerated list of companies for which the plaintiff was
entitled to receive a multimillion-dollar strategic transaction
fee. Id. at 152. The contract at issue, an engagement letter,
specified that the plaintiff could only receive the fee if the
ultimate purchaser was one of the investment firms identified in
an exhibit to the letter. Id. at 152-53. After a bench trial,
the court found that the plaintiff had viable claims for unjust
enrichment and quantum meruit because the defendant accepted
gratuitous services outside of the parties’ contractual
relationship under the engagement letter. Id. at 153 n.192.
Here, CTI’s efforts alongside Oridion/Covidien to establish
the IDN contracts did not constitute a “gratuitous” service
32

outside its contractual relationship with Covidien. Section 8(b)
of the 2008 distribution agreement required CTI to use “its best
efforts to actively promote sales” of Oridion products within
its defined territory. The parties specifically amended the
agreement to incorporate the price terms in the IDN contracts.
Furthermore, CTI was compensated for sales it made to the IDN
customers through the IDN agreements by the negotiated margins
in each. Therefore, I allow Covidien’s motion for summary
judgment with respect to CTI’s unjust enrichment claim because
the 2008 distribution agreement governs the same subject matter.
V.

Negligent Misrepresentation
CTI argues that Covidien’s assurances that CTI would remain

the distributor for the IDN customers for the duration of the
IDN agreements constitute negligent misrepresentation. CTI
points to the representations made by Mr. McGuinness, Mr.
Lowery, and Mr. Millonig discussed above, in which
Oridion/Covidien employees described the IDN contracts as
“annuities” that would protect CTI in the event Oridion was
acquired. CTI also emphasizes the PowerPoint presentation from
the October 2012 annual distributor meeting that stated the IDN
contracts required business to “flow through” the distributors.
Under Massachusetts law, a defendant is liable for
negligent misrepresentation when (1) in the course of business
transactions, (2) it supplies false information for the guidance
33

of others (3) in their business transactions (4) causing and
resulting in pecuniary loss to others (5) by their justifiable
reliance on the information, and (6) it fails to exercise
reasonable care or competence in obtaining or communicating the
information. DeWolfe v. Hingham Centre, Ltd., 985 N.E.2d 1187,
1192 (Mass. 2013). Covidien contends that CTI’s alleged reliance
on the “informal statements made by Covidien sales personnel—
including statements made orally, in email, and in a slide
presentation,” in the face of the 2008 distribution agreement
and amendments thereto, was unreasonable as a matter of law.
Docket No. 67, at 18.
Reliance is typically a question of fact for the jury.
Marram v. Kobrick Offshore Fund, Ltd., 809 N.E.2d 1017, 1031
(Mass. 2004). “However, in some circumstances a plaintiff’s
reliance on oral statements in light of contrary written
statements is unreasonable as a matter of law.” Id. When the
defendant’s conduct conflicts with an express written statement,
the conflict puts the plaintiff “on notice that [it] should not
rely on either statement.” Trifiro v. N.Y. Life Ins. Co., 845
F.2d 30, 33 (1st Cir. 1988). “Confronted by such conflict a
reasonable person investigates matters further; he receives
assurances or clarification before relying. A reasonable person
does not gamble with the law of the excluded middle, he suspends
judgment until further evidence is obtained.” Sands v. Ridefilm
34

Corp., 212 F.3d 657, 665 (1st Cir. 2000) (quoting Trifiro, 845
F.2d at 33).
In Trifiro, the court held that the plaintiff unreasonably
relied on oral statements “about the procedure for purchasing
properties” from the defendant. 845 F.2d at 33. One of the
defendant’s officers told an agent for the plaintiff that
although any deal would have to be approved by a committee, the
“committee approval would be a mere formality.” Id. Shortly
thereafter, the defendant sent the plaintiff a letter stating
that the committee had “sole discretion” to accept or reject the
deal, and requesting that the plaintiff acknowledge his
understanding of the committee approval requirement by returning
a signed copy of the letter. Id. The plaintiff then signed and
returned the letter as requested. Id. The Court found that it
was unreasonable for the plaintiff to rely on the oral assurance
that “committee approval would be a mere formality,” after
expressly acknowledging facts to the contrary. Id. “When a
person acts in a way contrary to his own acknowledged
understanding of the facts, his acts must be deemed unreasonable
as a matter of law.” Id. Similarly, in Sands, the First Circuit
held that it was unreasonable for the plaintiff to rely on oral
assurances from a prospective employer in the face of a written
memorandum and letters explaining that the defendants could not

35

commit to a start date or formal employment agreement until they
confirmed a source of funding. 212 F.3d at 664-65.
Here, Covidien argues that CTI’s reliance on Covidien’s
employees’ informal statements was unreasonable because the 2008
distribution agreement, and its corresponding amendments
incorporating the IDN contracts’ price terms, unambiguously
provide that Covidien will sell directly to the IDN users upon
termination. Because I agree with Covidien’s interpretation of
§ 15(d) with respect to the IDN contracts, I find that CTI’s
reliance was unreasonable as a matter of law. To be sure, the
2008 distribution agreement does not expressly address the IDN
contracts, in part because the parties did not begin to
establish IDN contracts until several years after signing the
distribution agreement. And the contemporary amendments to the
2008 distribution agreement focus on the new price terms for
each IDN. While the distribution agreement and its corresponding
amendments do not explicitly address which party will sell to
the IDN customers upon termination, the distribution agreement
does specify that Covidien can terminate the contract to engage
in a direct sales effort at any time. As discussed above,
although § 15(d) may allow CTI to continue to serve as the
distributor for some end-users that had supply agreements
directly with CTI for the duration of those contracts, it does

36

not give CTI the right to continue to sell to the IDN customers,
which had agreements directly with Covidien.
In short, there was an obvious “conflict” between the 2008
distribution agreement and Covidien’s representations with
respect to the IDN contracts that should have put CTI on notice
about the unreliability of Covidien’s statements. Trifiro, 845
F.2d at 33. Each time the parties amended the 2008 distribution
agreement to incorporate the IDN contracts’ price terms, the
parties included the following language: “Except as expressly
set forth above, no terms or provisions of the Distribution
Agreement are changed, modified, or otherwise affected by this
Amendment.” See, e.g., Docket No. 68, Ex. 10, at 3. Therefore,
the amendments to the distribution agreement did not change the
plain language of § 15(d), which does not grant CTI the right to
continue to sell to the IDN customers upon termination. The
Court allows Covidien’s motion for summary judgment with respect
to CTI’s claim for negligent misrepresentation.
VI.

Massachusetts General Laws Chapter 93A
CTI bases its Chapter 93A claim on the same conduct as its

claim for breach of the implied covenant of good faith and fair
dealing: Covidien’s alleged deceptive statements with respect to
its decision to go direct and the IDN agreements. Covidien
argues that CTI’s Chapter 93A claim fails as a matter of law
because all of CTI’s other causes of action do, and at best,
37

Covidien’s conduct “entails a conventional breach of contract
and nothing more.” Docket No. 67, at 20.
“Under §§ 2 and 11 of Chapter 93A, it is unlawful for those
engaged in trade or commerce to employ ‘unfair methods of
competition and unfair or deceptive acts or practices’ in
business transactions with others engaged in trade or commerce.”
Arthur D. Little, Inc. v. Dooyang Corp., 147 F.3d 47, 55 (1st
Cir. 1998) (quoting Mass. Gen. Laws ch. 93A, § 2). Although
there is “no clear definition of what conduct constitutes an
‘unfair or deceptive’ act,” courts require the objectionable
conduct to “attain a level of rascality that would raise an
eyebrow of someone inured to the rough and tumble of the world
of commerce.” Ahern v. Scholz, 85 F.3d 774, 798 (1st Cir. 1996).
“In short, a chapter 93A claimant must show that the defendant’s
actions fell within at least the penumbra of some common-law,
statutory, or other established concept of unfairness, or were
immoral, unethical, oppressive or unscrupulous, and resulted in
substantial injury to competitors or other businessmen.” Id.
(internal quotation marks, alterations, and citations omitted).
“Although whether a particular set of acts, in their
factual setting, is unfair or deceptive is a question of fact,
the boundaries of what may qualify for consideration as a
Chapter 93A violation is a question of law.” Id. at 797; see
also Casavant v. Norwegian Cruise Line Ltd., 952 N.E.2d 908,
38

911-12 (Mass. 2011). “It is well established that breach of a
contract can lead to a violation of Chapter 93A.” Ahern, 85 F.3d
at 798 (citing Anthony’s Pier Four, Inc. v. HBC Assocs., 583
N.E.2d 806, 821 (Mass. 1991)). However, the mere fact “that a
party knowingly breached a contract does not raise the breach to
the level of a Chapter 93A violation,” without more. Id. To
constitute an unfair or deceptive act, the objectionable conduct
must be “in disregard of known contractual arrangements and
intended to secure benefits for the breaching party,” or
otherwise use the breach “as a lever to obtain advantage for the
party committing the breach in relation to the other party;
i.e., the breach of contract [must have] an extortionate quality
that gives it the rancid flavor of unfairness.” Id. at 798-99
(citations omitted).
For the reasons discussed above with respect to CTI’s claim
for breach of the implied covenant of good faith and fair
dealing, the Court finds that CTI has met its burden to put
forward evidence demonstrating a genuine dispute of material
fact over whether Covidien intentionally made false
representations about its decision to go direct, and whether CTI
would continue to serve as the distributor under the IDN
agreements upon termination. Covidien asserts that, even if it
accepts CTI’s account of when Covidien decided to go direct,
only two IDN contracts were signed after the decision was made.
39

While that may be so, the timeline is unclear and disputed. CTI
claims that Covidien had finalized its plans to go direct by
September 2012, months before it actually did so in April 2013.
Meanwhile, Covidien maintains that there was still “a lot of
volatility about if and when [it] would go direct” as of October
2012. Millonig Dep., Docket No. 74, Ex. C., at 95-96.
Furthermore, there is a genuine dispute of material fact
over whether CTI was aware of the clause in the IDN agreements
granting Covidien the right to assume, at any time, the
distributor’s obligations, and sell directly to the IDN
customers, and whether Oridion/Covidien attempted to hide the
terms of the IDN contracts from CTI. CTI alleges that it was not
aware of the key provision, while Covidien maintains that at
least two of the end users, Indiana University Health and
HealthPartners, emailed CTI a copy of their IDN agreements in
May 2012 and August 2012, respectively. As discussed above, Mr.
Lowery testified at his deposition that he was instructed not to
share the terms of the IDN agreements with CTI, and could not
remember ever telling anyone at CTI about this provision. Lowery
Dep., Docket No. 74, Ex. F, at 64-67. Ms. Farmer also testified
that, when she asked for a copy of the IDN agreements on behalf
of CTI, Mr. Lowery responded that he was not allowed to share
the IDN contracts with her. Farmer Dep., Docket No. 74, Ex. I,

40

at 76-78. Thus, the Court denies Covidien’s motion for summary
judgment on CTI’s Chapter 93A claim.
ORDER
The defendant’s motion for summary judgment (Docket No. 66)
is ALLOWED in part and DENIED in part. The motion for summary
judgment on CTI’s breach of contract claim (Count I) with
respect to the IDN customers and Sparrow Health, CTI’s unjust
enrichment claim (Count III), and the negligent
misrepresentation claim (Count V) is ALLOWED. The motion for
summary judgment on CTI’s breach of contract claim (Count I)
with respect the eight end users that had supply agreements
directly with CTI, CTI’s claim for breach of the implied
covenant of good faith and fair dealing (Count II), and
violations of Chapter 93A, § 11 (Count VI) is DENIED.

/s/ PATTI B. SARIS
Patti B. Saris
Chief United States District Judge

41