EMC Corporation v. Petter

Filing 30

District Judge Timothy S Hillman: ORDER entered denying 11 Motion to Dismiss or stay the action. The Court grants summary judgment in favor of Plaintiff on Count Four. (Castles, Martin)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
____________________________________
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EMC CORPORATION,
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Plaintiff,
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CIVIL ACTION
v.
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NO. 15-40036-TSH
JAMES PETTER,
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Defendant.
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___________________________
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ORDER ON DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S AMENDED
COMPLAINT OR STAY THE ACTION (Docket No. 11)
May 13, 2015
HILLMAN, D.J.
Plaintiff EMC Corporation (“Plaintiff” or “EMC”) asserts claims against Defendant
James Petter (“Defendant”) arising out of the alleged scheme of a business competitor, Pure
Storage, Inc., (“Pure Storage”) to collude with former EMC employees to misappropriate
confidential EMC information and trade secrets. On January 15, 2015, Defendant announced that
he was resigning from his position with EMC Europe Ltd. (“EMC Europe”), a subsidiary of
EMC, to work for Pure Storage. Plaintiff seeks declaratory relief and damages under the EMC
Corporation Amended and Restated 2003 Stock Plan (“Stock Plan”) and Restricted Stock Unit
Agreement (“RSU Agreement”), entered into by the parties during Defendant’s employment
with EMC Europe.
Specifically, the Amended Complaint (Docket No. 8) asserts claims for declaratory
judgment regarding the vesting of Restricted Stock Units (Count One), declaratory judgment
regarding detrimental activity and rescission of vested Restricted Stock Units (Count Two),

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attorney’s fees and costs (Count Three), declaratory judgment regarding jurisdiction (Count
Four), breach of contract (Count Five), and breach of the covenant of good faith and fair dealing
(Count Six). Defendant has moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(6).
(Docket No. 11). Defendant alternatively requests that this case be dismissed under the doctrine
of forum non conveniens, or stayed pending the outcome of parallel litigation in the United
Kingdom. For the following reasons, Defendant’s motion is denied. Summary judgment on
Count Four is granted.
Background and Jurisdictional Facts
Plaintiff EMC is a Massachusetts corporation with its principal place of business in
Massachusetts, and offices and facilities throughout the District of Massachusetts. Defendant
resides in Surrey, England, and worked in London during his employment with EMC Europe.
See Petter Decl., Docket No. 13, ¶ 8. At the time of his resignation from EMC Europe, he was
Senior Vice President and Managing Director for the United Kingdom and Ireland. Id. at ¶ 5. As
part of Defendant’s compensation, EMC periodically awarded him shares of EMC stock, or
“Restricted Stock Units” (RSUs). To receive RSUs, Defendant was required to agree to the terms
of the RSU Agreement, which he would electronically accept from his office in London. Id. at ¶
16-18. On multiple occasions Defendant also signed hard copies of the RSU Agreement and
mailed them to EMC’s stock administration director in Hopkinton, Massachusetts. See Grace
Decl., Docket No. 21, ¶ 8. The RSU Agreement expressly incorporates the terms of the Stock
Plan, stating that an award “is made pursuant to and is subject to the provisions of this Restricted
Stock Unit Agreement and the Company’s Amended and Restated 2003 Stock Plan.” RSU
Agreement, Grace Decl., Docket No. 21, Ex. C. The Stock Plan, in turn, includes the following
forum selection and choice-of-law clause:

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13. Jurisdiction and Governing Law.
The parties submit to the exclusive jurisdiction and venue of the federal or state courts of
The Commonwealth of Massachusetts to resolve issues that may arise out of or relate to
the Plan or the same subject matter. The Plan shall be governed by the laws of The
Commonwealth of Massachusetts, excluding its conflicts or choice of law rules or
principles that might otherwise refer construction or interpretation of this Plan to the
substantive law of another jurisdiction. 

Stock Plan, Docket No. 8, Ex. A, ¶ 13. The Stock Plan also includes a provision allowing EMC
to cancel or rescind RSU awards where senior employees engage in “detrimental activity” as
defined in the plan. Id. at ¶ 6.7. It is this provision that EMC relies upon in seeking to void
Defendant’s RSV awards.
Beginning in 2009, Defendant traveled annually to Massachusetts once per year for an
EMC Leadership Summit. See Petter Decl., Docket No. 13, ¶ 14. On January 10, 2015,
Defendant traveled to Boston for the 2015 Leadership Summit. Id. at ¶ 20. At the time of the
2015 summit, Defendant had received an informal offer of employment from Pure Storage. Id. at
¶ 22. Defendant accepted the offer on January 12, 2015, once he had returned to the United
Kingdom. Id. EMC alleges that the Leadership Summit was a confidential conference and that
Defendant’s attendance, after having received an offer from Pure Storage, was “detrimental
activity” under the Stock Plan. See Pl.’s Am. Compl., Docket No. 8, ¶ 62-63. Due to this and
other conduct, EMC rescinded 8,721 vested RSUs that had been awarded to Defendant.
EMC filed this action on February 27, 2015. Two weeks later, Defendant filed suit
against EMC and EMC Europe in the High Court of Justice, Queen’s Bench Division, in
London, England (“the U.K. action”). Defendant’s U.K. action seeks declarations that certain
provisions of the Stock Plan are unenforceable, that he has not engaged in detrimental activity
under the Stock Plan, and that EMC’s rescission of the RSU awards was void.

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Analysis
Defendant’s motion to dismiss asserts that the Stock Plan’s forum selection clause is
unenforceable and that Defendant lacks sufficient contacts with Massachusetts for this Court to
exercise personal jurisdiction. Defendant alternatively argues that this Court should dismiss this
case in favor of the U.K. action under the doctrine of forum non conviens, or stay the litigation
pending the outcome in the U.K. action. The Court disagrees.
Forum Selection Clause
As a threshold matter, Defendant has filed a declaration asserting jurisdictional facts in
support of his motion to dismiss under 12(b)(2), as well as facts relevant to the 12(b)(6) analysis
of the enforceability of the forum selection clause. See Petter Decl., Docket No. 13, ¶ 17. With
respect to the enforceability of the forum selection clause, Defendant’s affidavit presents matters
outside the pleadings. Because Plaintiff had a reasonable opportunity to present an opposing
affidavit, see Grace Decl., Docket No. 21, no further discovery on Count Four is necessary and
the Court will not exclude the extraneous material related to the forum selection clause.
Therefore, to the extent that Defendant moves to dismiss Count Four under 12(b)(6), “the motion
must be treated as one for summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). See Noel v.
Walt Disney Parks and Resorts U.S., Inc., CV No. 10-40071-FDS, 2011 WL 6258334 (D. Mass.
2011); Rivera v. Centro Medico De Turabo, Inc., 575 F.3d 10, 16 n.3 (1st. Cir. 2009).
“It is well established that forum selection clauses are prima facie valid and should be
enforced unless enforcement is shown by the resisting party to be unreasonable under the
circumstances.” Rivera, 575 F.3d at 18 (internal quotations omitted). By its terms, the forum
selection clause in the Stock Plan is mandatory, see Stock Plan, Docket No. 8, Ex. A, ¶ 13
(stating that the parties submit to the “exclusive jurisdiction and venue of the federal or state

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courts of the Commonwealth of Massachusetts”), and covers all six counts of the Amended
Complaint. See id. (stating that the clause applies to claims that “arise out of or relate to the
Stock Plan or the same subject matter”); see also Huffington v. T.C. Grp., LLC, 637 F.3d 18, 21
(1st Cir. 2011) (describing threshold issues of forum selection clause analysis).
In the face of the provision’s plain language, Defendant does not carry his “heavy burden
of demonstrating why the clause should not be enforced.” Huffington, 637 F.3d at 21 (internal
quotations omitted). In determining the enforceability of forum selection clauses, both
Massachusetts and federal common law apply the standard described by the Supreme Court in
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907 (1972).1 See id. at 23. Under
Bremen, “the forum selection clause should control absent a strong showing” that:
(1) the clause was the product of fraud or overreaching; (2) enforcement would be
unreasonable and unjust; (3) proceedings in the contractual forum will be so gravely
difficult and inconvenient that the party challenging the clause will for all practical
purposes be deprived of his day in court; or (4) enforcement would contravene a strong
public policy of the forum in which suit is brought, whether declared by statute or by
judicial decision.
Id. (internal citations and alterations omitted). There is no contention that the clause was
the product of fraud or overreaching, and enforcement of the clause would not be unreasonable
or unjust. Defendant was free to decline the RSUs. Instead, he proactively agreed to the terms of
the Stock Plan, including the forum selection clause, by accepting the RSU Agreements
electronically. Such “clickwrap” agreements are commonly enforced in Massachusetts and
Federal Courts. See, e.g., Ajemian v. Yahoo!, 83 Mass. App. Ct. 565, 576, 987 N.E.2d 604 (2013)
(noting that “forum selection clauses have almost uniformly been enforced in clickwrap

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The Supreme Court has not stated whether enforcement of a forum selection law is substantive (requiring the
application of state law) or procedural (requiring the application of federal common law). See Huffington, 637 F.3d
at 21. The parties agree that this question is immaterial because both Massachusetts and federal common law use the
same standard when evaluating the enforceability of a forum selection clause.

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agreements”); Bagg v. HighBeam Research, Inc., 862 F. Supp. 2d 41, 45 (D. Mass. 2012).
Defendant also signed hard copies of the RSU Agreements and mailed them to EMC’s stock
administration director in Massachusetts.
To be sure, this litigation will be less convenient for Defendant than the U.K. action. But
he cannot show that it will be so gravely difficult and inconvenient that he will effectively be
deprived of his day in court. Defendant is no stranger to traveling to Massachusetts for
professional purposes, and has engaged capable Massachusetts attorneys to represent him here.
Finally, the only public policy of Massachusetts cited by Defendant as militating against
enforcement of the clause is that the parties shared unequal bargaining power. See Petter Decl.,
Docket No. 13, ¶ 17. Although the Stock Plan may technically be considered a “contract of
adhesion,” that fact alone does not contravene Massachusetts public policy. See Miller v. Cotter,
448 Mass. 671, 684 n.16, 863 N.E.2d 537 (2007). Consequently, the Court finds that the forum
selection clause is enforceable as a matter of law. Because no genuine issue of material fact
exists regarding the forum selection clause, summary judgment will enter in favor of Plaintiffs
on Count Four. See Fed. R. Civ. P. 56(a).
Personal Jurisdiction
Plaintiff has made the requisite showing that Defendant has sufficient contacts with
Massachusetts for this Court to exercise specific jurisdiction.2 Specific jurisdiction exists “over
an out-of-state defendant where the cause of action arises directly out of, or relates to, the
defendant’s forum-based contacts.” Negron-Torres v. Verizon Commc’ns, Inc., 478 F.3d 19, 24
(1st Cir. 2007). To determine whether the Constitution permits the exercise of specific

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EMC does not allege that Defendant has Massachusetts contacts sufficient to support general jurisdiction.

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jurisdiction, the First Circuit uses a three-part inquiry.3 First, the legal claims must relate to or
arise out of the defendant’s contacts in the forum. See Phillips Exeter Acad. v. Howard Phillips
Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999). Second, the defendant’s contacts must constitute
“purposeful availment of the benefits and protections” of the forum’s laws. Id. Third, the
exercise of jurisdiction must be reasonable, in light of the First Circuit’s “gestalt factors.” Id.
On multiple occasions Defendant sent his acceptance of the Stock Plan, both
electronically and in hard copy, to Massachusetts. The result of Defendant’s assent to the
contract’s terms was that he acquired equity ownership in a Massachusetts corporation
headquartered in Massachusetts. Defendant also concedes that he was in Boston for the EMC
Leadership Summit after having received an offer from Pure Storage, and just days before
resigning from EMC Europe—conduct that Plaintiff alleges to be “detrimental activity” under
the Stock Plan. These contacts are sufficient to support specific jurisdiction. First, Defendant’s
repeated acceptance of the RSU Agreement and travel to Boston in 2015 give rise to each of
EMC’s claims under the Stock Plan, thereby satisfying the relatedness prong of the minimum
contacts test. Second, Defendant purposefully availed himself of this forum’s laws by contracting
to obtain shares of a Massachusetts corporation, and by assenting to a forum selection and
choice-of-law clause that invokes the protections of Massachusetts’ law and courts. This activity
made it reasonably foreseeable that Defendant could be haled into this Court. See Hahn v.
Vermont Law School, 698 F.2d 48 (1st Cir. 1983) (finding sufficient contacts to support
jurisdiction where out-of-state educational institution sent application information and

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Personal jurisdiction exists over an out-of-state defendant where it is authorized by the forum state’s long-arm
statute and is consistent with the due process clause of the Fourteenth Amendment to the U.S. Constitution. Daynard
v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 52 (1st Cir. 2002). Because the Massachusetts
long-arm statute has been interpreted to extend to the limits allowed by the U.S. Constitution, this Court will
proceed directly to the due process inquiry. Id.

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acceptance letter to plaintiff in Massachusetts).
The exercise of jurisdiction over Defendant is also reasonable in light of the “gestalt
factors.”4 While Defendant will be burdened by defending himself in this Court, that burden is
not “onerous in a special, unusual, or other constitutionally significant way.” Nowak v. Tak How
Investments, Ltd., 94 F.3d 708, 718 (1st Cir. 1996). Massachusetts has a strong interest in
providing a Massachusetts corporation with a forum to litigate claims arising from its own Stock
Plan. See Wolverine Proctor & Schwartz, Inc. v. Aeroglide Corp., 394 F. Supp. 2d 299 (D. Mass.
2005). This is especially true where, as here, a defendant has agreed to litigate in Massachusetts
courts according to Massachusetts law, and a Massachusetts plaintiff seeks a resolution in its
home forum. Although the courts of the United Kingdom are capable of adjudicating this
dispute, the Court sees no advantage to be had by dismissing this case in favor of the later-filed
U.K. action, other than the convenience it will provide to Defendant. Defendant raises no other
pertinent policy arguments that would counsel against jurisdiction in this Court. Accordingly, the
Court finds that exercising jurisdiction over Defendant is reasonable.
Forum non conveniens and discretionary stay
Defendant’s arguments that the Court should grant a discretionary stay or dismissal on
forum non conveniens grounds are equally unavailing. The doctrine of forum non conveniens
allows a federal court to dismiss a claim “where an alternative forum is available in another
nation that is fair to the parties and substantially more convenient for them or the courts.”
Mercier v. Sheraton Int’l, Inc., 981 F.2d 1345, 1329 (1st Cir. 1992). This discretionary tool is
limited, however, by “the principle that a plaintiff’s choice of forum should rarely be disturbed.”

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The “gestalt factors” are: (1) the defendant’s burden of appearing; (2) the forum state’s interest in adjudicating the
dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief; (4) the judicial system’s interest in
obtaining the most effective resolution of the controversy; and (5) the common interests of all sovereigns in
promoting substantive social policies. Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 209 (1st Cir. 1994).

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Adelson v. Hananel, 510 F.3d 43, 52 (1st Cir. 2007) (internal quotations omitted). The party
seeking dismissal bears a “heavy burden” of demonstrating that (1) an alternative and adequate
forum is available; and (2) convenience and judicial efficiency strongly favor litigating the claim
in the second forum. Id. Even assuming that the United Kingdom provides an adequate and
available forum, Defendant’s arguments regarding convenience and judicial efficiency do not
overcome the strong presumption in favor of Plaintiff’s choice of its home courts.
The forum con conveniens analysis requires courts to balance factors relevant to the
private and public interests implicated by the case.5 Iragorri v. Int’l Elevator, Inc., 203 F.3d 8,
12 (1st Cir. 2000). In light of the Stock Plan’s forum selection clause, however, this Court gives
no weight to Defendant’s arguments about the private interests in efficiency and convenience. As
the Supreme Court observed in Atlantic Marine Construction, “[w]hen parties agree to a forumselection clause, they waive the right to challenge the preselected forum as inconvenient or less
convenient for themselves or their witnesses.” Atlantic Marine Constr. Co., Inc. v. U.S. Dist.
Court for the Western Dist. of Texas, 134 S.Ct. 568, 580-82 (2013) (holding that where a forum
selection clause is present, lower federal courts “should not consider arguments about the parties’
private interests” when considering a defendant’s motion to transfer venue, and noting that courts
should evaluate forum non conveniens the same way). The public interest factors weigh strongly
against dismissal. This dispute concerns stock in a Massachusetts corporation, granted by that
corporation pursuant to a contract that invokes the protections of Massachusetts courts. Further,
because Massachusetts law applies, this Court is best suited to adjudicate the dispute. Therefore,

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Private interest factors include “the relative ease of access to sources of proof; availability of . . . witnesses; . . .
[and] all other practical problems that make trial of a case easy, expeditious and inexpensive.” Iragorri v. Int’l
Elevator, Inc., 203 F.3d 8, 12 (1st Cir. 2000). Public interest factors include “the administrative difficulties of docket
congestion; the general goal of having localized controversies decided at home . . . ; the trier’s relative familiarity
with the appropriate rules of decision; and the burdens of jury duty.” Id. (internal quotations omitted).

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the Court will not grant dismissal under forum non conveniens.
Finally, the Court declines to grant a stay pending the outcome of the U.K. action. The
Court gives little credence to Defendant’s assertion that a stay would solve inefficiency and
comity concerns, because Defendant created those problems by filing the U.K. action two weeks
after EMC brought this suit. See Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren,
361 F.3d 11, 20 (1st Cir. 2004). The Court will not abdicate its responsibility to exercise
jurisdiction where it exists, thereby depriving a Massachusetts corporation of its right to have its
claims adjudicated in this forum. See Chico Service Station, Inc. v. Sol Puerto Rico Ltd., 633
F.3d 20, 29 (1st Cir. 2011); McCarthy v. Azure, 22 F.3d 351, 355 (1st Cir. 1994). Although
Defendant will be inconvenienced by this litigation, fairness to EMC counsels in favor of
proceeding with this first-filed action. The request for stay will be denied.
Conclusion
For the foregoing reasons, Defendant’s Motion to Dismiss Plaintiff’s Amended
Complaint or Stay the Action (Docket No. 11) is denied.
The Court grants summary judgment in favor of Plaintiffs on Count Four. Section 13 of
the EMC Corporation Amended and Restated 2003 Stock Plan is enforceable. Disputes arising
out of, or relating to, the EMC Corporation Amended and Restated 2003 Stock Plan, including
those at issue in this action, are subject to the exclusive jurisdiction of the federal or state courts
of the Commonwealth of Massachusetts.

SO ORDERED.

/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE
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