inVentiv Health Consulting, Inc. v. Equitas Life Sciences, LLC et al
Filing
47
Magistrate Judge Marianne B. Bowler: ORDER entered: The motion to remand (Docket Entry # 17 ) is ALLOWED and this case is REMANDED to the Massachusetts Superior Court Department (Middlesex County). In light of the remand and lack of diversity jurisdiction, this court declines to address either the motion to dismiss (Docket Entry # 4 ) or the motion to transfer venue (Docket Entry # 6 ).(Putnam, Harold)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
INVENTIV HEALTH CONSULTING, INC.,
Plaintiff,
v.
CIVIL ACTION NO.
17-10410-MBB
EQUITAS LIFE SCIENCES, ALAN D. FRENCH,
PRIYA GOGIA, SUMMER ATKINSON, JASON DEBASITIS,
and DENNIS MELETICHE,
Defendants.
MEMORANDUM AND ORDER RE:
PLAINTIFF’S MOTION TO REMAND OR, ALTERNATIVELY, JURISDICTIONAL
DISCOVERY (DOCKET ENTRY # 17); DEFENDANT’S MOTION TO DISMISS
FOR FAILURE TO STATE A CLAIM (DOCKET ENTRY # 4); DEFENDANTS’
MOTION TO TRANSFER VENUE (DOCKET ENTRY # 6)
December 22, 2017
BOWLER, U.S.M.J.
Pending before this court are cross motions by the parties,
plaintiff inVentiv Health Consulting, Inc. (“plaintiff”) and
defendants Equitas Life Sciences, LLC (“Equitas”), Alan D. French
(“French”), Priya Gogia (“Gogia”), Summer Atkinson (“Atkinson”),
Jason Debasitis (“Debasitis”), and Dennis Meletiche (“Meletiche”)
(collectively, “defendants”).
Plaintiff seeks to remand this
action pursuant to 28 U.S.C. § 1447(c) or, alternatively, to
conduct limited jurisdictional discovery.
Defendants oppose the motion to remand.
(Docket Entry # 17).
(Docket Entry # 20).
Meletiche filed a motion to dismiss under Fed. R. Civ. P.
12(b)(6) (“Rule 12(b)(6)”) (Docket Entry # 4) and French, Gogia,
Atkinson, and Debasitis (collectively, “Former Employees”) as
well as Equitas filed a motion to transfer venue pursuant to 28
U.S.C. § 1404(a).
(Docket Entry # 6).
After conducting a
hearing on September 6, 2017, this court took the motions (Docket
Entry ## 4, 6, 17) under advisement.
PROCEDURAL HISTORY
On March 2, 2017, plaintiff filed a complaint in
Massachusetts Superior Court Department (Middlesex County)
against the Former Employees, Equitas, and Meletiche.
Entry # 1-1).
(Docket
Plaintiff alleges that defendants engaged in a
civil conspiracy to form Equitas, a company that would compete
with plaintiff, “secretly take inVentiv’s clients,” and
“misappropriate [its] trade secrets.”
(Docket Entry # 1-1).
The complaint sets out the following claims:
tortious
interference with contractual relations against Equitas (Count
I); tortious interference with contractual relations against
French (Count II); tortious interference with advantageous
business relations against all defendants (Count III); trade
secret misappropriation under the common law and Massachusetts
General Laws chapter 93, section 42 (“chapter 93”) against
Equitas and the Former Employees (Count IV);1 unfair or deceptive
trade practices in violation of Massachusetts General Laws
chapter 93A, section 11 (“chapter 93A”), against Equitas and the
1
In the complaint, Count IV is erroneously listed as a second
Count III.
2
Former Employees (Count V);2 and civil conspiracy against all
defendants (Count VI).3
(Docket Entry # 1-1).
On March 13, 2017, defendants removed this action on the
basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1332,
1441, and 1446.
(Docket Entry # 1).
Debasitis and Meletiche,
however, defeat diversity jurisdiction because, as Massachusetts
residents, they are citizens of Massachusetts.
1441(b)(2).
See 28 U.S.C. §
Defendants therefore contend that plaintiff
fraudulently joined Debasitis and Meletiche and diversity
jurisdiction is therefore proper.
(Docket Entry # 1).
Plaintiff
moves to remand this action on the basis that defendants fail to
demonstrate fraudulent joinder.
(Docket Entry # 17).
FACTUAL BACKGROUND
Plaintiff is incorporated in North Carolina with a principal
place of business in Raleigh, North Carolina.
1).
(Docket Entry # 1-
Equitas is a Delaware limited liability company with a
principal place of business in Cambridge, Massachusetts.
Entry # 1-1).
(Docket
Defendants assert that Equitas’ members are not
citizens of Massachusetts.4
2
Because the complaint lists two Count IIIs, Count V is
mislabeled as Count IV.
3
Because the complaint lists two Count IIIs, Count VI is
mislabeled as Count V.
4
“The citizenship of a limited liability company ‘is determined
by the citizenship of all of its members.’” D.B. Zwirn Special
Opportunities Fund, L.P. v. Mehrotra, 661 F.3d 124, 125 (1st
3
Plaintiff provides “strategic management consulting services
to biopharmaceutical and medical technology companies.”
Entry # 1-1).
(Docket
Plaintiff’s clients are pharmaceutical and/or
biotechnology companies, medical device companies, and
diagnostics companies in North America, Europe, and Japan.
(Docket Entry # 1-1).
Plaintiff’s consulting services include:
[N]ew product planning for development-stage assets, launch
planning for assets in the critical product launch window,
strategy development and tactical solutions for in-line
products, portfolio strategy, and organizational
development.
(Docket Entry # 1-1).
Plaintiff also helps clients develop
commercialization strategies and market development plans for new
products.
(Docket Entry # 1-1).
Over 85% of plaintiff’s
business consists of repeat clients.
(Docket Entry # 1-1).
Plaintiff’s employees bear responsibility for developing and
maintaining relationships with its clients.
1).
(Docket Entry # 1-
Plaintiff invested “considerable amounts of time, money and
effort” to maintain and develop goodwill with its clients.
(Docket Entry # 1-1).
According to the complaint, throughout the course of its
business, plaintiff “developed, accumulated, maintained, and
refined trade secrets and other confidential and proprietary
Cir. 2011) (quoting Pramco, LLC ex rel. CFSC Consortium, LLC v.
San Juan Bay Marina, Inc., 435 F.3d 51, 54 (1st Cir. 2006)).
4
information” at “great expense.”
(Docket Entry # 1-1).
Such
trade secrets and information include:
[B]usiness plans, account plans, business policies, client
proposals, client deliverables, financial plans and
forecasts, research, pricing information, business
forecasts, product information, expert data and reports,
business strategies, statements of work, market access
strategies, value propositions, client and prospect lists
and information, client usage, data sources, industry and
company analyses, market information and analysis,
methodologies, templates, techniques, and other information
relating to inVentiv, its clients, and its contractors . .
..
(Docket Entry # 1-1).
Plaintiff protects its trade secrets and
confidential and proprietary information on secure, passwordprotected computer systems.
(Docket Entry # 1-1).
Plaintiff
terminates its employees’ access to such systems “immediately
upon termination of employment” and requires the employees to
return company property and information upon termination.
(Docket Entry # 1-1).
Plaintiff also requires employees to sign
an employment agreement, which includes covenants regarding
confidentiality, noncompete, and/or nonsolicitation.
Entry # 1-1).
(Docket
The confidentiality covenants specifically
restrict former employees from disclosing plaintiff’s
confidential information.
(Docket Entry # 1-1).
Debasitis’
employment agreement contained a forum selection clause that
states:
This Agreement shall be subject to and governed by the laws
of the State of North Carolina, without regard to the
conflicts of law rules of such states. All disputes
5
pertaining to this Agreement shall be decided exclusively by
a state or federal court located in Wake County, North
Carolina, and Employee hereby consents to personal
jurisdiction of such courts.
(Docket Entry # 1-1, Ex. A).
French formerly served as a managing director for plaintiff.
(Docket Entry # 1-1).
In this role, French supervised a number
of plaintiff’s employees, including other Former Employees.
(Docket Entry # 1-1).
While employed by plaintiff, each of the
Former Employees signed an employment agreement, which included
restrictive covenants regarding the “confidentiality and
protection of inVentiv’s information,” customer relationships,
and goodwill.
(Docket Entry # 1-1, Ex. A).
The employment
agreements also contained noncompete covenants, which prohibited
the Former Employees from “competing against inVentiv for at
least one year” following termination of employment.
Entry # 1-1).
(Docket
The confidentially restriction prohibited the
Former Employees from disclosing confidential information
belonging to plaintiff, or “using such information on behalf of
anyone other than inVentiv.”
(Docket Entry # 1-1).
From 2013 to 2016, French served as the primary point of
contact for two of plaintiff’s clients (“the Clients”), with whom
plaintiff had relationships prior to French’s involvement.
(Docket Entry # 1-1).
The Clients generated “several million
dollars” in revenue for plaintiff between 2013 and 2016.
6
(Docket
Entry # 1-1).
One of the Clients, “Client A,” was plaintiff’s
second largest client in terms of annual revenue and, from 2014
to 2015, plaintiff’s revenue from Client A significantly
increased.
(Docket Entry # 1-1).
While employed by plaintiff,
French worked on a specific project for Client A called “Project
One.”
Meletiche was employed by Client A during the time that
Client A was plaintiff’s client.
(Docket Entry # 1-1).
In or
around “the summer of 2014,” French informed plaintiff’s
employee, Keith Kelly (“Kelly”), about a discussion or
discussions with Meletiche concerning the formation of a new
health economics and outcomes research company.
18-2).
(Docket Entry #
According to Kelly’s affidavit, a health economics and
outcomes research company provides companies in pharmaceutical
and biotech industries with information needed to “demonstrate
the value of their innovations to providers, healthcare decision
makers, payers, and ultimately, stakeholders.”5
18-2).
(Docket Entry #
Kelly told French that he was not interested in joining a
new company, but would speak with Meletiche about the opportunity
as a courtesy.
(Docket Entry # 18-2).
Kelly subsequently spoke
to both Meletiche and French, at which time Meletiche asked Kelly
if he would be interested in joining Meletiche to start a health
5
Plaintiff began offering health economics and research
services in November 2015. (Docket Entry # 18-2).
7
economics and outcomes research company.
Kelly declined Meletiche’s offer.
(Docket Entry # 18-2).
(Docket Entry # 18-2).
French and Meletiche incorporated Equitas more than a year
later on November 3, 2015, at which time French was still
employed by plaintiff.
(Docket Entry # 1-1).
French requested
to work part time for plaintiff in November 2015, citing his
desire to “devote more time to completing his doctorate.”
(Docket Entry # 1-1).
Plaintiff approved French’s request, after
which French began working part time in or around February 2016.
(Docket Entry # 1-1).
The complaint alleges that French
requested to work part time in order to devote more time to
Equitas.
(Docket Entry # 1-1).
Equitas’ application for registration, filed with the
Massachusetts “Secretary of the Commonwealth Corporations
Division,” lists French and Meletiche as the founding members of
Equitas and Equitas’ focus as “‘consulting in the life sciences
industry.’”
(Docket Entry # 1-1, Ex. B).
The domain name
“equitasls.com” was created on December 3, 2015.
1-1).
(Docket Entry #
On December 17, 2017, Equitas applied for an H-1B Visa to
allow Equitas to hire a foreign worker to fill a managing
director position.
(Docket Entry # 1-1).
The H-1B Visa
application listed Meletiche’s home as Equitas’ business address.
(Docket Entry # 1-1).
Equitas’ principal place of business was
8
located in Meletiche’s home as recently as February 2017.
(Docket Entry # 1-1).
In early 2016, French informed plaintiff that business with
Client A “was winding down.”
(Docket Entry # 1-1).
Plaintiff
subsequently experienced a corresponding decline in revenue from
Client A.
(Docket Entry # 1-1).
Beginning in January 2016,
several of plaintiff’s employees, supervised by French, began
submitting resignations.
(Docket Entry # 1-1).
Gogia resigned
as of January 15, 2016, stating that she needed “to take out some
time to both focus on her family and take a break to think about
her career direction.”
(Docket Entry # 1-1).
On March 22, 2016, Client A sent an email to French at his
Equitas email, “adf@equitasls.com,” at which time French was
still employed by plaintiff.
(Docket Entry # 1-1).
French
neither sought nor obtained authorization from plaintiff to work
on behalf of Equitas or to perform work for Client A on the side.
(Docket Entry # 1-1).
On May 25, 2016, Equitas posted a classified advertisement
seeking a managing director, which directed applicants to send
applications to Meletiche’s home address.
(Docket Entry # 1-1).
The advertisement described the managing director’s role as,
among other responsibilities, “[s]erv[ing] as a subject-matter
expert at global prices” and market access, including “European,
Asian, & Latin American” markets.
9
(Docket Entry # 1-1).
As set
out in the advertisement, Equitas required applicants to have a
master’s degree in “health policy, health care [management],
public health, health econ[omics], pharmacy/biotech, bus[iness]
admin[istration], or a relevant discipline . . ..”
# 1-1).
(Docket Entry
The advertisement further required a minimum six years
of management consulting experience “focusing on the
pharmaceutical/biotech industry.”
(Docket Entry # 1-1).
Atkinson resigned as of May 27, 2016, citing her desire to
“enter graduate school.”
(Docket Entry # 1-1).
Around June
2106, French requested an unpaid leave of absence claiming he
“was dealing with family medical issues that were causing him
stress.”
(Docket Entry # 1-1).
approximately six weeks.
French’s unpaid leave lasted
(Docket Entry # 1-1).
On June 3, 2016,
Equitas amended its application for registration with the
Massachusetts Secretary of the Commonwealth Corporations Division
naming Kerry Seagle as Equitas’ sole manager.
(Docket Entry # 1-
1, Ex. B).
Debasitis resigned as of July 8, 2016, claiming a personal
reason for “why [he] sought employment elsewhere.”
# 1-1).
(Docket Entry
French resigned as of July 25, 2016 to “focus on [his]
own health and wellbeing.”
(Docket Entry # 1-1).
In total,
between January 15 and July 25, 2016, eight of plaintiff’s
employees resigned “citing personal reasons for their departure.”
(Docket Entry # 1-1).
10
The complaint asserts, upon information and belief, that
French orchestrated “at least some of” plaintiff’s employees’
resignations and encouraged the Former Employees to work for
Equitas.
(Docket Entry # 1-1).
None of the Former Employees
informed plaintiff that they were resigning to work for Equitas
and each of the Former Employees began working for Equitas after
resigning.
(Docket Entry # 1-1).
On January 18, 2017, plaintiff received an electronic
calendar invitation from Client A.
(Docket Entry # 1-1).
The
calendar invitation was addressed to French’s previous inVentiv
email address, “Alan.French@inventivhealth.com.”
1-1).
(Docket Entry #
The calendar invitation was also addressed to Atkinson at
“ssa@equitasls.com” and Gogia at “pmg@equitasls.com.”
Entry # 1-1).
(Docket
On January 19, 2017, a Client A employee addressed
an email to French’s previous inVentiv email address and
Atkinson’s Equitas email address.
(Docket Entry # 1-1).
This
second email concerned work on Project One by both Client A and
Equitas.
(Docket Entry # 1-1).
It was this second email,
according to the complaint, that provided the first indication to
plaintiff that the Former Employees were employed by Equitas and
that French, Gogia, and Atkinson were working with Client A on
Project One.
(Docket Entry # 1-1).
Plaintiff performed forensic analysis of the computers
previously used by certain Former Employees.
11
(Docket Entry # 1-
1).
Plaintiff discovered that French accessed plaintiff’s
confidential information on July 23, 2016, two days prior to his
resignation.
(Docket Entry # 1-1).
When French accessed such
confidential information, he immediately inserted a USB device
into the computer.
(Docket Entry # 1-1).
Plaintiff contends
that the USB device could be used to transport a copy of
confidential information elsewhere.
(Docket Entry # 1-1).
Based
on these findings, the complaint alleges that defendants used, or
are currently using, plaintiff’s confidential information and
goodwill in connection with operating Equitas.
(Docket Entry #
Docket Entry # 1-1).
On January 24, 2017, plaintiff delivered demand letters to
French, Gogia, and Atkinson.
(Docket Entry # 1-1).
The letters
stated that French, Gogia, and Atkinson were working for Equitas
in violation of their employment agreements with plaintiff.
(Docket Entry # 1-1).
by January 27, 2017.
The letters requested a written response
(Docket Entry # 1-1).
the Former Employees was to include:
The response from
“a description of their
work for Equitas”; “written assurance that they will honor their
obligations to inVentiv and not solicit or service any clients of
inVentiv – including Client A”; “written assurances that they
will not solicit other employees of inVentiv to leave the
company”; “written assurances that they will cease and desist
from further solicitation of, or work for, inVentiv’s clients,
12
including the Clients”; and “written assurances that they have
returned or destroyed all confidential or proprietary
information, as well as other information, that belongs to
inVentiv.”
(Docket Entry # 1-1).
French, Gogia, and Atkinson
responded to the demand letters on February 16, 2017, but did not
provide the requested information or the written assurances.
(Docket Entry # 1-1).
Two weeks later, plaintiff filed the
complaint in Massachusetts Superior Court (Middlesex County).
(Docket Entry # 1-1).
DISCUSSION
I.
Jurisdiction and Standard of Review
In general, “any civil action brought in a State court of
which the district courts of the United States have original
jurisdiction, may be removed” by a defendant to federal court.
28 U.S.C. § 1441.
This court has original, diversity
jurisdiction over state law claims where the amount in
controversy exceeds $75,000 and where there is “complete
diversity among the parties.”
28 U.S.C. § 1332; Owen Equip. &
Erection Co. v. Kroger, 437 U.S. 365, 373 (1978).
Where, as
here, a defendant “is a citizen of the state in which [the]
action is brought,” 28 U.S.C. § 1441(b)(2) precludes removal.
Plaintiff, however, “may not thwart the exercise of a
defendant’s right of removal by fraudulently joining a nondiverse defendant who has no real connection to the case.”
13
In re
Fresenius Granuflo/Naturalyte Dialysate Prods. Liability Litig.,
76 F. Supp. 3d 321, 322 (D. Mass. 2015).
As explained by the
First Circuit:
[U]nder the doctrine of fraudulent joinder, removal is not
defeated by the joinder of a non-diverse defendant where
there is no reasonable possibility that the state’s highest
court would find the complaint states a cause of action upon
which relief may be granted.
Universal Truck & Equip Co., Inc. v. Southworth-Milton, Inc., 765
F.3d 103, 108 (1st Cir. 2014).
Stated differently, “‘if
plaintiff fails to state a cause of action against a resident
defendant and the failure is obvious according to the settled
rules of the state, the joinder of the resident defendant is
fraudulent.’”
In re: Stryker Lift v. 40 Femoral Head Products
Liability Litigation, 2017 WL 3815937, at *1 (D. Mass. Aug. 31,
2017) (quoting Universal Truck, 765 F.3d at 108 n.3).
More
specifically, defendants must establish:
[B]y clear and convincing evidence either that there has
been outright fraud committed in the plaintiff’s pleadings,
or that there is no possibility, based on the pleadings,
that the plaintiff can state a cause of action against the
non-diverse defendant in state court.
Suburban Realty Co., Inc. v. Cuna Mutual Group & Cumis, No. 16–
40073–TSH, 2017 WL 1164491 at *1 (D. Mass. 2017) (citing Mills v.
Allegiance Healthcare Corp., 178 F. Supp. 2d 1, 5 (D. Mass. 2001)
(adopting Second Circuit test articulated in Whitaker v. Am.
Telecasting, Inc., 261 F.3d 196, 207 (2nd Cir. 2001), and quoting
14
Whitaker); see In re New Eng. Mut. Life Ins. Co. Sales Practices
Litigation, 324 F. Supp. 2d 288, 298 (D. Mass. 2004) (recognizing
use of Whitaker by judges in this district); see also Universal
Truck, 765 F.3d at 108.
The doctrine of fraudulent joinder requires this court to
consider whether “there is no reasonable possibility that the
state’s highest court would find that the complaint states a
cause of action upon which relief may be granted against the nondiverse defendant.”
In re: Stryker Lift, 2017 WL 3815937, at *1;
see also Universal Truck, 765 F.3d at 108.
The linchpin of this
analysis is whether “joinder of the non-diverse party has a
reasonable basis in law and fact.”
Mills, 178 F. Supp. 2d at 4.
Stated another way, a non-diverse party is fraudulently joined
“if existing state law squarely precludes a plaintiff’s claim
against a non-diverse defendant, and such deficiency is ‘apparent
from the face of the original complaint.’”
Rosbeck v. Corin
Group, PLC, 140 F. Supp. 3d 197, 202 (D. Mass. 2015).
Therefore,
a defendant’s burden to prove fraudulent joinder is often cited
as “heavy.”
Id.; see, e.g., Pampillonia v. RJR Nabisco, Inc.,
138 F.3d 459, 461 (2d Cir. 1998) (“defendant seeking removal
bears a heavy burden of proving fraudulent joinder”); Phillips v.
Medtronic, Inc., 754 F. Supp. 2d 211, 217 (D. Mass. 2010).
A fraudulent joinder analysis is similar to a Rule 12(b)(6)
analysis, but is “more lenient than that for a motion to
15
dismiss.”
Rosbeck, 140 F. Supp. 3d at 203 (citing Mayes v.
Rapoport, 198 F.3d 457, 466 n.16 (4th Cir. 1999)).
When
assessing a claim of fraudulent joinder, the court “is not bound
by the allegations in the complaint, and may consider affidavits
and other materials that bear on the question of whether there is
a reasonable basis for joinder of a defendant.”
Suburban Realty
Co., 2017 WL 1164491, at *2; Mills 178 F. Supp. 2d at 6; see also
Badon v. RJR Nabisco Inc., 236 F.3d 282, 285 n.3 (5th Cir. 2000)
(considering “undisputed summary judgment type evidence” when
determining whether any reasonable possibility of recovery under
state law existed); Antony v. Duty Free Americas, Inc., 705 F.
Supp. 2d 112, 115 (D. Mass. 2010) (“fraudulent joinder doctrine
provides an exception to the general rule prohibiting courts from
considering evidence extrinsic to the facts in the complaint”)
(citing Mills, 178 F. Supp. 2d at 6).
Furthermore, “in
determining whether a plaintiff has the possibility of recovery
against a defendant, the court is to resolve all disputed issues
of fact and ambiguities in favor of the non-removing party.”
Suburban Realty Co., No. 16–40073–TSH, 2017 WL 1164491, at *2
(citing Fabiano Shoe Co., Inc. v. Black Diamond Equipment, Ltd.,
41 F. Supp. 2d 70, 71-72 (D. Mass. 1999)).
II.
Plaintiff’s Arguments
Plaintiff contends that this case must be remanded pursuant
to 28 U.S.C. § 1447(c) because diversity of citizenship does not
16
lie between the parties and plaintiff only asserted Massachusetts
statutory and common law claims.
(Docket Entry # 17).
Defendants counter that the complaint fails to allege sufficient
facts to state any claim for relief against Meletiche and,
therefore, plaintiff fraudulently joined Meletiche and cannot
rely on his joinder to defeat diversity jurisdiction.
Entry # 20).
(Docket
Defendants further maintain that the forum
selection clause in Debasitis’ employment agreement dictates that
plaintiff may only bring claims against Debasitis in North
Carolina and, accordingly, plaintiff fraudulently joined
Debasitis.
(Docket Entry # 20).
A. Tortious Interference with Business Relations against
Meletiche
Plaintiff asserts a tortious interference with advantageous
business relations claim and a civil conspiracy claim against
Meletiche.
(Docket Entry # 18).
With respect to the tortious
interference claim, defendants initially argue that plaintiff
fails to allege that Meletiche ever “personally engaged in any
business contact with any of [p]laintiff’s customers on behalf of
Equitas.”
(Docket Entry # 20) (emphasis in original).
Defendants note that plaintiff did not list Meletiche as one of
the Former Employees and did not include Meletiche in the
allegation that Equitas and the Former Employees failed to comply
with their “‘contractual, common law, and statutory
17
obligations.’”
(Docket Entry # 20) (quoting Docket Entry # 1-1,
¶ 85).
Plaintiff counters that the complaint “alleges sufficient
facts to support a claim for tortious interference against
Meletiche.”
(Docket Entry # 24).
Plaintiff points out that it
had a “beneficial business relationship with Client A,” Meletiche
knew of the relationship, and he “misappropriated inVentiv’s
confidential information,” and currently uses such confidential
information to service plaintiff’s former clients.
# 24).
(Docket Entry
Plaintiff further contends that Meletiche, along with the
other defendants, used plaintiff’s relationships to divert
business away from plaintiff, which constitutes intentional
interference with “advantageous business relationships.”
(Docket
Entry # 24).
Under the doctrine of fraudulent joinder, “‘removal is not
defeated by the joinder of a non-diverse defendant where there is
no reasonable possibility that the state’s highest court would
find that the complaint states a cause of action upon which
relief may be granted against the non-diverse defendant.’”
In
re: Stryker, 2017 WL 3815937, at * 1 (quoting Universal Trucking
Co., 765 F.3d at 108).
In analyzing whether there is a
“reasonable possibility” that the Massachusetts Supreme Judicial
Court would find that the complaint states a cause of action, it
is necessary to examine the required elements of an interference
18
with advantageous business relations claim.
Those elements are
as follows:
“(1) [T]he plaintiff has a business relationship for
economic benefit with a third party, (2) the defendants knew
of that relationship, (3) the defendant interfered with that
relationship through improper motive or means, and (4) the
plaintiff’s loss of the advantage resulted directly from the
defendants’ conduct.”
Brewster Wallcovering Co. v. Blue Mountain Wallcoverings, Inc.,
864 N.E. 2d 518, 541 (Mass. App. Ct. 2007) (quoting McName v.
Jenkins, 754 N.E. 2d 740, 745 (Mass. App. Ct. 2001)); see Swanset
Development Corp. v. City of Taunton, 668 N.E. 2d 333, 338 (Mass.
1996) (citing United Truck Leasing Corp. v. Geltman, 551 N.E. 2d
20 (Mass. 1990)).
Under the first element, a defendant’s interference must be
with an advantageous business relationship between plaintiff and
a third party.
See Cavicchi v. Koski, 855 N.E. 2d 1137, 1141
(Mass. App. Ct. 2006); Guest-Tek Interactive Entertainment Inc.
v. Pullen, 731 F. Supp. 2d at 80, 86 (D. Mass. 2010).
Thus, to
satisfy the first element, “‘the plaintiff must prove that he had
a business relationship for economic benefit with a third
party.’”
Cavicchi v. Koski, 855 N.E. 2d at 1141 (setting out
elements of a “‘claim for interference with advantageous business
relations’”); Guest-Tek Interactive Entertainment Inc. v. Pullen,
731 F. Supp. 2d at 86.
Here, plaintiff sufficiently demonstrates
a “relationship for economic benefit with a third party,”
19
specifically with the Clients, including Client A.
Koski, 855 N.E.2d at 1141; (Docket Entry # 1-1).
Cavicchi v.
The complaint
states that plaintiff’s economic benefit from the Clients,
specifically Client A, constituted “several million dollars in
revenue for inVentiv.”
(Docket Entry # 1-1).
With respect to
the second element, the complaint sufficiently alleges that
Meletiche knew of plaintiff’s relationship with the Clients,
including Client A, because Meletiche was employed by Client A
at the same time Client A conducted business with plaintiff.
(Docket Entry # 1-1).
Regarding the third element of an “improper motive or
means,” the improper conduct must extend “‘beyond the
interference itself.’”
Cavicchi v. Koski, 855 N.E. 2d at 1142;
accord United Truck Leasing Corp. v. Geltman, 551 N.E. 2d at 2324; James L. Miniter Ins. Agency, Inc. v. Ohio Indemnity Co.,
112 F.3d 1240, 1250 (1st Cir. 1997) (plaintiff “must demonstrate
wrongfulness beyond the interference itself”).
Violation of “a
statute or a rule of common law” or use of threats,
misrepresentations of facts or “other improper means” provides a
sufficient improper motive or means.
United Truck Leasing Crop.
V. Geltman, 551 N.E. 2d at 24; Bhammer v. Loomis, Sayles & Co.,
Inc., No. 15-14213-FDS, 2016 WL 3892371, at *7 (D. Mass. July
14, 2016) (finding it “well-established” that “a
20
misrepresentation is an improper means of interference”) (citing
Draghetti v. Chmielewski, 626 N.E.2d 862, 869 (Mass. 1994)).
Further, the standard considers the use of “improper motive or
improper means; the plaintiff need not prove both.”
Hill, 689 N.E. 2d 833, 838 (Mass. App. Ct. 1998).
Kurker v.
A “legitimate
advancement of [defendant’s] own economic interest” does not
constitute an improper motive.
Pembroke Country Club, Inc. v.
Regency Savings Bank, F.S.B., 815 N.E. 2d 241, 246 (Mass. App.
Ct. 2004); see United Truck Leasing Corp v. Geltman, 551 N.E. 2d
at 24 (defendant’s motives “to benefit his customers and himself
financially” are insufficient); see, e.g., TalentBurst Inc. v.
Collabera, Inc., 567 F. Supp. 2d 261, 269 (D. Mass. 2008)
(“offering of a job to a competitor’s at-will employee,
including one that provides better pay and benefits, does not as
a matter of law constitute improper means”).
Courts, however, inquire whether the defendant “interfered
with a restrictive covenant governing a competitor’s employee”
and such interference “creates a presumption that [the
defendant] had an improper motive.”
Supp. 2d at 269.
TalentBurst Inc., 567 F.
For example, in the context of a motion to
dismiss, an improper motive exists “‘where plaintiff has
established that it had a non-competition agreement with [its
former employee], and that the defendants . . . solicited [the
employee] to leave the plaintiff to accept employment with [the
21
defendant], it has stated a sufficient cause of action to
survive a motion to dismiss.’”
Id. at 269 (quoting Cambridge
Internet Sols. Inc. v. Avicon Group, No. 99-1841, 1999 WL
959673, at *3 (Mass. Sept. 21, 1999)) (brackets in original).
Although TalentBurst addressed a tortious interference with
contractual relations claim rather than a tortious interference
with an advantageous business relations claim, the elements of
the two torts are similar.6
See Coyle v. Kittredge Ins. Agency,
Inc., No. 12-40014-TSH, 2014 WL 1330859, at *9 (D. Mass. Mar.
28, 2014) (noting that “substantive elements of tortious
interference with contractual relationships and tortious
interference with advantageous business relationships are
substantially similar”)
at 1141).
(citing Cavicchi v. Koski, 855 N.E.2d
Notably, “The same knowledge and improper means that
are required to prove a claim for interference with an existing
contract are also required to prove a claim for interference
with a prospective or advantageous business relationship.”
Holmes Products Corp. v. Dana Lighting, Inc., 958 F. Supp. 27,
32 (D. Mass. 1997) (collecting cases).
Defendants’ argument that Meletiche did not contact any of
plaintiff’s customers is misguided in light of the facts and
6
“An ‘advantageous relation[,]’” however, “is a ‘contemplated
contract’ or prospective business relationship.” Buster v.
George W. Moore, Inc., 783 N.E.2d 399, 416 (Mass. 2003).
22
reasonable inferences in the complaint.
Meletiche founded a
competing company and operated it out of his home.
Entry # 1-1).
(Docket
Drawing reasonable inferences, see In re:
Stryker, 2017 WL 3815937, at *1, he was intimately familiar with
Equitas and its operations.
Indeed, Meletiche’s home served as
the principle business address for Equitas.
Meletiche spoke to
Kelly, plaintiff’s employee, about joining a new company
covering the same business as plaintiff, i.e., health economics
and research, albeit in the summer of 2014.
2).
(Docket Entry # 18-
French, a co-founder of Equitas along with Meletiche,
accessed and likely copied plaintiff’s confidential information
shortly before French resigned.
plaintiff to work at Equitas.
The Former Employees left
French, plaintiff’s managing
director prior to his resignation, likely knew about the
restrictive covenants in the Former Employee’s employment
agreements due, in part, to the pretextual reasons the Former
Employees gave for their resignations.
Meletiche worked for
Client A when it was one of plaintiff’s major clients.
French
communicated with Client A through his Equitas email address and
Client A worked with Equitas on Project One.
A reasonable possibility exists that Meletiche improperly
solicited one or more of the Former Employees to leave plaintiff
in order to work for Equitas in violation of their noncompetition
agreements.
Meletiche’s reasonably inferred intimate familiarity
23
with Equitas and his relationship with French render it more than
a reasonable possibility that French informed Meletiche about the
noncompete restriction in one or more of the Former Employee’s
employment agreements.
The reasonable possibility of an improper
motive on the part of Meletiche is further bolstered by the Kelly
affidavit, which demonstrates that Meletiche spoke to at least
one of plaintiff’s employees about the prospect of leaving
plaintiff to join a new company covering the same business as
plaintiff.
(Docket Entry # 18-2).
With respect to the fourth
element, the complaint states that plaintiff experienced a
decline in its advantageous and economically beneficial
relationship with Client A, and other clients, as a result of
Meletiche’s and the other defendants’ actions.
(Docket Entry #
1-1).
Hence, although defendants are correct that the complaint
did not include Meletiche as a “Former Employee” or in certain
allegations of wrongdoing, the complaint and the record as a
whole presents a reasonable possibility of a tortious
interference with business relations claim against Meletiche.
Based on the facts set out in the factual background, there is a
“reasonable possibility that the state’s highest court would find
that the complaint states a cause of action” for tortious
interference with business relations against Meletiche.
Stryker, 2017 WL 3815937, at *1.
24
In re:
Indeed, defendants fail to show
no reasonable possibility not only by clear and convincing
evidence, but also by a lesser preponderance of the evidence
standard.
2.
Civil Conspiracy by Meletiche
Plaintiff also alleges that Meletiche committed civil
conspiracy because he was aware of plaintiff’s restrictive
covenants by virtue of his “long-standing working relationship
with French” and his role, together with French, in forming
Equitas.
(Docket Entry # 18).
Plaintiff submits that Meletiche
used, or at least knew the other defendants were using,
plaintiff’s confidential information to service plaintiff’s
clients, namely Client A.
(Docket Entry # 18).
Furthermore,
plaintiff argues that Meletiche provided “substantial assistance
in furthering the scheme” because “he founded Equitas, hired the
Former Employees, and runs Equitas from his home.”
(Docket
Entry # 18).
Defendants dispute such allegations, claiming that
plaintiff was required to, and failed, to show “substantial
assistance, with the knowledge that such assistance is
contributing to a common tortious plan.”
(Docket Entry # 20);
(citing Kurker v. Hill, 689 N.E. 2d 833 (Mass. App. Ct. 1998)).
Defendants also assert that plaintiff did not allege that
Meletiche accessed “[p]laintiff’s purportedly confidential
information, used such information, took any steps to attract
25
clients to Equitas or even encouraged any of the other
Defendants to do so.”
(Docket Entry # 20).
Defendants maintain
that, without such allegations, “[p]laintiff cannot state a
claim of civil conspiracy against Mr. Meletiche, individually.”
(Docket Entry # 20).
Defendants further argue that Kelly’s
affidavit undercuts plaintiff’s civil conspiracy claim because
it depicts conduct in 2014.
(Docket Entry # 20).
Defendants
contend that plaintiff “fails to explain how any action Mr.
Meletiche undertook in 2014 can possibly shed any substantive
light on actions he allegedly took two years later.”
Entry # 20).
(Docket
Defendants note that, while Kelly “declined Mr.
Meletiche’s entreaty,” Kelly’s affidavit does not show that
Kelly mentioned any restrictive covenants to Meletiche in 2014
“as a reason for declining the opportunity.”
(Docket Entry #
20).
To establish a civil conspiracy, plaintiff must “show an
underlying tortious act in which two or more persons acted in
concert and in furtherance of a common design or agreement.”
Bartle v. Berry, 953 N.E. 2d 243, 253 (Mass. App. Ct. 2011);
accord Orellana v. Deutsche Bank National Trust Co., No. 12–
11982–NMG, 2013 WL 5348596, at *11 (D. Mass. Aug. 30, 2013)
(“[t]he concerted action theory of civil conspiracy requires an
underlying tort”); see Aetna Casualty Surety Co. v. P & B
Autobody, 43 F.3d 1546, 1565 (1st Cir. 1994).
26
This “form of
civil conspiracy” imposes liability “on one individual for the
tort of another.”
Kurker v. Hill, 689 N.E. 2d 833, 836 (Mass.
App. Ct. 1998); see Grant v. John Hancock Mut. Life Ins. Co.,
183 F. Supp. 2d 344, 363 (D. Mass. 2002) (“‘defendant may be
held liable for actions done by others pursuant to a common
design or with the defendant’s substantial assistance or
encouragement’”); see also Metropolitan Property and Casualty
Ins. Co. v. Boston Regional Physical Therapy, Inc., 550 F. Supp.
2d 199, 203 (D. Mass. 2008); Massachusetts Laborer’s Health &
Welfare Fund v. Philip Morris, Inc., 62 F. Supp. 2d 236, 244 (D.
Mass. 1999) (“a defendant may be held liable for actions done by
others pursuant to a common design or with the defendant’s
substantial assistance or encouragement”).
Furthermore, under
the doctrine of fraudulent joinder, “‘all disputed questions of
fact and any ambiguities in the current controlling substantive
law’” must be resolved in plaintiff’s favor.
In re: Stryker,
2017 WL 3815937, at *1 (quoting Phillips v. Medtronic, Inc., 754
F. Supp. 2d at 215); see also Suburban Realty Co., 2017 WL
1164491, at *2 (citing Fabiano Shoe Co., 41 F. Supp. 2d at 7172).
With respect to defendants’ allegation that Meletiche did
not provide any “substantial assistance” in assisting with a
“tortious plan,” as established above, there is a reasonable
possibility that Meletiche engaged in tortious interference with
27
plaintiff’s advantageous business relations and such tortious
interference satisfies the “underlying tort” requirement for
civil conspiracy.
See Orellana, 2013 WL 5348596, at *11 (“[t]he
concerted action theory of civil conspiracy requires an
underlying tort”).
More to the point, the complaint reflects a
reasonable possibility that Meletiche engaged in substantial
assistance in furtherance of a common design.
Meletiche
incorporated Equitas together with French on November 3, 2015
and, together with French, spoke to at least one of plaintiff’s
employees, Kelly, about leaving plaintiff to join a new company
in the summer of 2014.
(Docket Entry # 18-2).
Meletiche worked
for Client A while Client A was serviced by French in his
capacity as a managing director for plaintiff.
1-1).
(Docket Entry #
Although defendants argue that Meletiche’s actions in 2014
cannot shed light on Meletiche’s actions two years later, as
previously stated and drawing reasonable inferences from the
facts in the complaint, Meletiche was intimately familiar with
Equitas and communicated with French, who likely knew about the
restrictive covenants.
Together, these facts demonstrate a
“reasonable possibility” that Meletiche acted in concert with
French and/or the Former Employees in furtherance of a common
design.
Furthermore, any ambiguities with respect to the alleged
facts in the complaint regarding civil conspiracy, are resolved
28
in favor of plaintiff.
See In re: Stryker, 2017 WL 3815937, at
* 1.
In sum, based on the facts in the complaint, there is a
reasonable possibility that the Massachusetts Supreme Judicial
Court would find that the “complaint states a cause of action
upon which relief may be granted against the non-diverse
defendant,” Meletiche, both as to the interference with business
relations claim and the civil conspiracy claim.
2017 WL 3815937 at *1.
In re: Stryker,
In light of the foregoing, Meletiche, is
properly joined and diversity jurisdiction is therefore lacking.
See 28 U.S.C. § 1441(b)(2).
It is therefore not necessary to
address the reasonable possibility vis-à-vis the claims against
Debasitis.
Furthermore, because a remand is required and this
court lacks diversity jurisdiction, this court declines to
address either the motion to dismiss (Docket Entry # 4) or the
motion to transfer venue (Docket Entry # 6).
CONCLUSION
In accordance with the foregoing discussion, the motion to
remand (Docket Entry # 17) is ALLOWED and this case is REMANDED
to the Massachusetts Superior Court Department (Middlesex
County).
In light of the remand and lack of diversity
jurisdiction, this court declines to address either the motion to
29
dismiss (Docket Entry # 4) or the motion to transfer venue
(Docket Entry # 6).
/s/ Marianne B. Bowler
MARIANNE B. BOWLER
United States Magistrate Judge
30
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