Justia Business Law Opinion SummariesArticles Posted in Massachusetts Supreme Judicial Court
Attorney General v. Facebook, Inc.
In this case involving the Attorney General's investigation into Facebook, Inc. under Mass. Gen. Laws ch. 93A focusing on whether Facebook misrepresented the extent to which it protected or misused user data the Supreme Judicial Court held that most of the civil investigative demands (demands) served by the Attorney General were not covered by the attorney-client privilege but that the work product doctrine applied to the documents requested.After potential widespread misuse of Facebook user data by third-party applications was reported Facebook started an investigation, known as the app developer investigation (ADI), to identify the extent to which the apps had misused user data and to determine potential resulting legal liabilities. At issue were six requests contained with the Attorney General's demands. Facebook argued that the attorney-client privilege and the work product doctrine protected the information. A judge determined that most of the information was neither privileged nor work product. The Supreme Judicial Court reversed in part, holding (1) the documents sought by the first five requests were covered by the work product doctrine; (2) the sixth request required further review; and (3) a remand was required to determined whether some of the documents requested constituted opinion work product. View "Attorney General v. Facebook, Inc." on Justia Law
Smith v. Kelley
In this case involving a final judgment entered against a professional corporation for the fraudulent activity of one of its associates, the Supreme Judicial Court held that, in the unique circumstances of this case, Plaintiff, who was defrauded by the associate, may pursue successor liability against the sole proprietorship of Defendant, the sole shareholder and officer of the professional corporation.Plaintiff was defrauded by the corporation's associate in a mortgage scam. Defendant was the sole shareholder and officer of the corporation, RKelley-Law, P.C. (the P.C.). After the entry of final judgment against the P.C. Defendant voted to wind up the corporation and, that same day, began operating his law practice as a sole proprietorship. Thereafter, the P.C. was placed into bankruptcy proceedings. Because the P.C. had no assets, Plaintiff sought to recover from Defendant personally. The district court granted summary judgment in favor of Defendant, concluding that the doctrine of successor liability could not be applied where the successor in interest was a natural person rather than a corporate entity. The court of appeals affirmed. The Supreme Judicial Court reversed, holding that because Defendant's sole proprietorship was a mere continuation of the former professional corporation Plaintiff may pursue successor liability against the proprietorship. View "Smith v. Kelley" on Justia Law
UBS Financial Services, Inc. v. Aliberti
In this case concerning the legal relationship between the commercial custodian of three nondiscretionary IRAs and a named beneficiary of those accounts the Supreme Judicial Court reversed in part the decision of the superior court judge allowing UBS Financial Services, Inc.'s (UBS) motion for judgment on the pleadings as to all of Donna Aliberti's claims, holding that the facts alleged stated a claim that UBS's conduct violated Mass. Gen. Laws ch. 93A, 9 (chapter 93A).Following the death of the IRAs' original account holder this dispute arose between Aliberti, a named IRA beneficiary, and UBS, as IRA custodian. Aliberti asserted claims of breach of contract, breach of fiduciary duty, violation of chapter 93A, and intentional infliction of emotional distress. The superior court judge allowed UBS's motion for judgment on the pleadings as to all claims. The Supreme Judicial Court reversed in part, holding (1) there was no plausible claim for breach of fiduciary duty because the custodian of a nondiscretionary IRA does not generally owe a fiduciary duty to a named beneficiary of that IRA; and (2) the interactions between the commercial custodian of a nondiscretionary IRA and a named beneficiary of that IRA occur in a business context within the meaning of chapter 93A, and the alleged injurious conduct of UBS plausibly constituted a chapter 93A violation. View "UBS Financial Services, Inc. v. Aliberti" on Justia Law
Blanchard v. Steward Carney Hospital, Inc.
The Supreme Judicial Court affirmed the order of the motion judge denying Defendants' special motion to dismiss Plaintiffs' defamation claim pursuant to the anti-SLAPP statute, Mass. Gen. Laws ch. 231, 59H, holding that the motion judge did not err in concluding that Plaintiffs' colorable defamation claim was not a SLAPP suit.Plaintiffs, nine nurses who had been fired from Steward Carney Hospital, Inc., filed this defamation action against the hospital and others (collectively, Defendants). Defendants filed a special motion to dismiss the defamation claim under the anti-SLAPP statute. A superior court judge denied the motion. The Supreme Judicial Court affirmed in Blanchard v. Steward Carney Hospital, Inc., 477 Mass. 141 (2017), after augmenting the anti-SLAPP framework devised in Duracraft Corp. v. Holmes Products Corp., 247 Mass. 156 (1998) (Duracraft) and remanded for further proceedings. On remand, the motion to dismiss was again denied. The Supreme Judicial Court affirmed after applying the newly augmented framework, holding that the defamation claim was not a SLAPP suit because it was not brought with the primary motivation of chilling the hospital defendants' right to petition. View "Blanchard v. Steward Carney Hospital, Inc." on Justia Law
Chelsea Housing Authority v. McLaughlin
The Supreme Judicial Court vacated the superior court's grant of summary judgment in favor of Defendants, the former accounts of Plaintiff, the Chelsea Housing Authority, on the ground that Plaintiff's claim of negligence against Defendants was barred by the common-law doctrine of in pari delicto, holding that, by enacting Mass. Gen. Laws ch. 112, 87A 3/4, the Legislature intended to preempt the doctrine of in pari delicto in cases where an accountant is sued for failing to detect fraud committed by a client.In this action, Plaintiff sought to recover the losses incurred from the accountants' alleged negligent failure to detect the fraudulent conduct of its former executive director, its former finance director, and others. A superior court judge concluded that Plaintiff's claim was barred by the doctrine of in pari delicto without addressing the applicability of section 87A 3/4. The Supreme Judicial Court vacated the summary judgment, holding that the Legislature has preempted the common-law doctrine of in pari delicto doctrine as it applies to the negligent conduct of accountants and auditors in failing to detect fraud. View "Chelsea Housing Authority v. McLaughlin" on Justia Law
Calixto v. Coughlin
The Supreme Judicial Court affirmed the superior court’s dismissal of employees’ (Employees) putative class action lawsuit brought against the corporate officers (Officers) of a ISIS Parenting, Inc. (Company), holding that the superior court judge properly granted the Officers’ motion to dismiss.After the Company abruptly ceased operations and terminated its entire workforce, the Employees brought a class action lawsuit against the Company in federal court alleging a violation of the Federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101-2109 (WARN Act). After receiving a nearly $2 million default judgment, the Employees brought a putative class action lawsuit against the Officers in state court under Mass. Gen. Laws ch. 149, 148 (Wage Act), alleging (1) the WARN Act damages constituted wrongfully withheld “earned wages” for which the Officers were liable; and (2) the Officers committed a breach of fiduciary duties owed to the Company by allowing the Company to violate the WARN Act. The superior court granted the Officers’ motion to dismiss. The Supreme Judicial Court affirmed, holding that the Employees’ complaint was properly dismissed because (1) WARN Act damages are not “earned wages” under the Wage Act; and (2) the Employees did not assert a viable claim for breach of fiduciary duties. View "Calixto v. Coughlin" on Justia Law
Allison v. Eriksson
Mass. Gen. Laws ch. 156C, 60(b) provides the exclusive remedy for dissenting members of a limited liability company that has voted to merge, so long as the merger is undertaken in accordance with Mass. Gen. Laws ch. 156C, 59-63.In this case, a member of a limited liability company (LLC) conducted a merger in breach of his fiduciary and contractual duties. The judge granted equitable relief. At issue was whether distribution of dissenting members’ interest in the LLC is the exclusive remedy of minority shareholders who objected to the merger and whether the judge erred in declining to rescind the merger. The Supreme Court held (1) where, as here, a merger was not conducted in compliance with Mass. Gen. Laws ch. 156C, 63, the remedy provided by Mass. Gen. Laws ch. 156C, 60(b) providing for distribution of dissenting members’ interest is not exclusive; (2) the trial judge did not abuse his discretion in fashioning an equitable remedy in this case, as rescission of the merger would be complicated and inequitable; and (3) the portion of the trial judge’s decision that increased Plaintiff’s interest in the merged LLC to five percent is remanded because there was no basis in the record for that figure. View "Allison v. Eriksson" on Justia Law
Segal v. Genitrix, LLC
After the dissolution of Gentix, a biotech research company established as a Delaware LLC with headquarters in Boston, Johnson and Rose, former Gentix board members and investors were found personally liable under G. L. c. 149, 148 (Wage Act), for failing to pay wages owed to the former president of Genitrix, Segal. On direct appellate review, the Massachusetts Supreme Judicial Court reversed, concluding that the Wage Act does not impose personal liability on board members, acting only in their capacity as board members, or investors engaged in ordinary investment activity. To impose such liability, the statute requires that the defendants be "officers or agents having the management" of a company, G. L. c. 149, 148. The defendants were not designated as company officers and had limited agency authority. The only officer having the management of the company was the plaintiff, not the defendants. View "Segal v. Genitrix, LLC" on Justia Law
Koshy v. Sachdev
At issue in this case was the construction of Mass. Gen. Laws ch. 156D, 14.30, the corporate dissolution statute, which allows a shareholder to petition a judge of the superior court to dissolve a corporation in the event of a deadlock between its directors. Plaintiff and Defendant were the sole shareholders and directors of a corporation. Plaintiff filed a petition pursuant to the corporate dissolution statute seeking to dissolve the corporation. After a jury-waived trial, Plaintiff also filed a separate claim for contempt of court. Defendant counterclaimed. A judge rejected all of Plaintiff’s claims and Defendant’s counterclaims. The Supreme Judicial Court remanded the matters, holding (1) the impasse as to fundamental matters of corporate governance and operations existing under these circumstances gave rise to a state of “true deadlock” such that the remedy of dissolution provided by the statute was allowable; (2) because dissolution is a discretionary remedy, the superior court must make a determination as to whether it is the appropriate remedy under the circumstances; and (3) the superior court must consider the allegations raised in the complaint for contempt concerning conduct that occurred after the trial. View "Koshy v. Sachdev" on Justia Law
Chitwood v. Vertex Pharmaceuticals, Inc.
Plaintiff, a shareholder of a Corporation, made a demand for corporate records pursuant to Mass. Gen. Laws ch. 156D. 16.02(b), claiming that he needed to inspect the records in order to investigate his allegation that the board of directors had committed a breach of its fiduciary duty of oversight. After the Corporation rejected the demand Plaintiff commenced an action in the superior court seeking an order compelling the Corporation to make the requested corporate records available to Plaintiff. The trial judge dismissed the complaint with prejudice, determining that Plaintiff had failed to meet his burden of showing a proper purpose to inspect corporate records under section 16.02(b). The Supreme Judicial Court vacated the judgment dismissing Plaintiff’s claim for inspection and remanded, holding that the trial judge applied too demanding a standard in determining whether Plaintiff had a proper purpose. View "Chitwood v. Vertex Pharmaceuticals, Inc." on Justia Law