BLS Blog

In Bertolino v. Fracassa, Judge Salinger ruled that the advice-of-counsel defense did not insulate Frederick McDonald, a defendant in the case, from liability under the Massachusetts Uniform Securities Act (MUSA), G.L. c. 110A, § 410. McDonald claimed that because he relied on his counsel’s advice to determine what he needed to disclose when soliciting investors, he could not be held liable for failing to disclose material facts to potential investors when he offered and sold membership units in his LLC. Rejecting McDonald’s argument, Judge Salinger reasoned that, because the advice-of-counsel defense is available only “to rebut the scienter element of a crime or civil charge requiring a willful or intentional violation of the law” and “willful or intentional misconduct is not an element of liability under MUSA,” McDonald couldn’t rely on that defense. Judge Salinger also reasoned that, even if the advice-of-counsel defense were viable under MUSA, McDonald proffered no evidence that “he made [a] complete disclosure to counsel, sought advice as to the legality of his conduct, received advice that his conduct was legal, [or] relied on that advice in good faith.” 

Last month, the Social Law Library sponsored the Business Litigation Session 2021 Year in Review. The panel included Judge Kenneth Salinger, the BLS Administrative Justice, as well as Michael Tuteur and Andrew Yost, attorneys at Foley & Lardner LLP.

The Massachusetts Supreme Judicial Court (SJC) recently ruled that a limitation-of-liability provision provides no protection for defendants who willfully or knowingly engage in unfair or deceptive conduct in violation of G. L. c. 93A, § 11.

In H1 Lincoln Inc. v. South Washington Street, LLC, the SJC invalidated a limitation-of-liability clause in a commercial leasing contract. The SJC held that the provision was “unenforceable as contrary to public policy” because of the lessor’s “fraudulent misrepresentations and intentional schemes to string along and take advantage of” the leasee. When a party’s conduct is sufficiently “callous and intentional” to “merit multiple damages” under G. L. c. 93A, § 11, the SJC reasoned, public policy concerns and the legislative intent of the statute to deter intentionally unfair and deceptive acts require invalidation of contractual limitations on liability.

Three new judges have joined the BLS rotation.

Judge Peter Krupp replaced Judge Karen Green for the January-June rotation period of BLS1. In 2013, Governor Deval Patrick appointed Judge Krupp to the Superior Court. Before his appointment, Judge Krupp founded Lurie & Krupp (n/k/a Lurie Friedman); worked for the Committee for Public Counsel Services; and served as an Assistant Federal Public Defender in the District of Massachusetts. Judge Krupp began his career as an Associate at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo. You can find more information about Judge Krupp’s background at Massachusetts Lawyers Weekly.

As reported here last summer, Judge Salinger denied lululemon’s motion to dismiss a summary process action brought by lululemon’s landlord, CWB Retail. Later in the litigation, CWB voluntarily dismissed the action with prejudice. lululemon then brought a motion for attorney’s fees under the parties’ lease.

It was another eventful year at the BLS, which included Judge Green replacing Judge Kaplan in the BLS1. As 2020 concludes, check out our top five widely read posts:

• Facebook Ordered to Turn Over Internal Investigation Documents to Massachusetts Attorney General: Judge Davis of the BLS ordered Facebook to produce documents to Massachusetts Attorney General Maura Healey (AG). The AG obtained the order while investigating Facebook’s policies and protections related to user data.
• Community Health Systems Affiliate Found Subject to Personal Jurisdiction in Massachusetts: In Steward Health Care System v. CHSPSC, Judge Sanders found that CHSPSC, an affiliate of Community Health Systems (CHS), is subject to personal jurisdiction in Massachusetts for claims made under transition-services agreement (TSAs) signed along with an asset-purchase agreement (APA).
• lululemon’s Motion to Dismiss Eviction Case Denied: In CWB Retail Limited Partnership v. Lululemon USA, Inc., lululemon moved to dismiss a summary-process action brought by its landlord, CWB Retail Limited Partnership.
• Comcast Prevails in Dispute over Interpretation of Commercial Lease: Maynard Industrial Properties Associates Trust (MIPA), a commercial landlord, sued Comcast of Massachusetts III, Inc. (Comcast). The dispute focused on the amount Comcast would owe under an extension of the amended lease.
• John J. Donovan Loses Again: Court Rules that Award in Derivative Action be Distributed Based on Shareholders’ Investment to Avoid Windfall to Disloyal Fiduciary: In Brining v. Donovan, the latest blow to former MIT business professor, John J. Donovan, Judge Davis held that shareholders in Donovan’s failed internet start-up, SendItLater (SIL), could recover more than $700,000 in attorneys’ fees in addition to a December 2019 award of $1.57 million in damages.

Under Massachusetts procedure, a party has the right to compel an opponent to disclose its testifying expert’s opinions through interrogatories. But unlike federal procedure, a party under Massachusetts procedure must obtain leave of court to depose a testifying expert. See Mass. R. Civ. P. 26(b)(4)(A). That relief is warranted, according to Judge Salinger writing in Lubin & Meyer, P.C. v. Manning, only if an expert deposition is “reasonable and necessary.”

As Judge Salinger observed in Lubin & Meyer, a party can typically make that showing where a deposition “is needed to obtain information effectively to cross-examine the expert, and that doing so will likely streamline the presentation of the case at trial.” Or as Judge Salinger wrote (quoting Nelson G. Apjohn, Further Discovery of Expert Witnesses Under Massachusetts Rule of Civil Procedure 26, 88 Mass. L. Rev. 197, 199 (2004)), “‘a court should allow a motion for further discovery under Rule 26(b)(4) if it is satisfied that the moving party’s interest is limited to obtaining the information needed for cross-examination and not designed to build her own case on the work of an opposing party’s expert.’”

Lubin & Meyer, Judge Salinger ruled, failed to make the requisite Rule 26(b)(4)(A) showing.

Judge Salinger first noted that the defendant’s expert “provided a 47-page report that discusses his relevant background and expertise, identifies the case materials he has reviewed, describes his understanding of the case, and explains in detail the opinions and conclusions [he] reached.”

He then rejected the plaintiff’s two arguments in favor of allowing the expert deposition.

First, Plaintiff argues that it should be allowed to ask the witness whether he has opinions that are not disclosed in his report. But there is no need to depose any expert regarding opinions that they have not disclosed. At trial, the expert’s testimony will be limited to what is contained in his expert report.

Second, Plaintiff says it will be challenging the admissibility of this witness’s opinions on the ground that he is not qualified to testify on these topics, the proffered opinions are irrelevant, and the issues addressed in the expert’s report are not the appropriate subject of expert testimony. But Plaintiff does not explain why it needs to depose the witness in order to raise such challenges. The expert’s written report either does or does not establish that he is qualified to testify about the disclosed opinions and conclusions. And Defendant either can or cannot show that those opinions are relevant and the proper subject of expert testimony. There is no apparent need for an expert deposition on any of those gatekeeper issues of admissibility.

Judge Salinger concluded: “In sum, Plaintiff has not shown that deposing Defendant’s expert is reasonable and necessary. The Court will therefore deny the motion.”

The Business Litigation Session of the Massachusetts Superior Court:

Docket Number: 1784CV02352-BLS2

Case Name: LUBIN & MEYER, P.C. V. JOHN J. MANNING

Date of Decision: March 9, 2020

Judge: Kenneth W. Salinger, Justice of the Superior Court

In Hershey v. Mount Vernon Partners, LLC, Judge Green faced dueling motions to dismiss in a dispute arising from the purchase of an “ultra-luxury” condominium in Beacon Hill. Judge Green granted Brett Hershey’s motion, in part, dismissing counterclaims for interference with business relations and violation of the Massachusetts Wiretap Act brought by the defendants, Mount Vernon Partners, LLC, Marcel D. Safar, Chevron Partners, LLC and Chevron Builders, LLC. Judge Green also denied most of the defendants’ motion to dismiss, allowing all but one of Hershey’s claims (a claim against Safar in his individual capacity) to proceed.    

In CWB Retail Limited Partnership v. Lululemon USA, Inc., lululemon moved to dismiss a summary-process action brought by its landlord, CWB Retail Limited Partnership. CWB sought to evict lululemon after CWB sent three notices of default. The notices alleged that lululemon was unlawfully storing goods in a corridor leading to an emergency exit. lululemon moved to dismiss the action on three grounds: (1) the notices of default were ineffective because they were sent to the wrong address; (2) the notices were inadequate because they did not specify what code provision lululemon had violated; and (3) the claimed defaults were not serious enough to warrant forfeiture of the lease. Judge Salinger denied the motion. 

As we previously blogged, Facebook and Massachusetts Attorney General Maura Healey (AG) are embroiled in a dispute over documents. After Facebook refused to produce certain information created in the course of its “App Developer Investigation,” the AG filed a petition in the BLS to compel Facebook’s compliance with her civil-investigative demand. Facebook opposed the petition, claiming that the sought-after information was work product and protected by the attorney-client privilege. Judge Davis rejected Facebook’s arguments, ordering Facebook to produce documents within 90 days of his order.

After Judge Davis handed down his order, Facebook filed a notice of appeal and moved for a stay pending appeal. The AG opposed the stay. Judge Davis denied the motion.

Judge Davis grounds his denial on two main points.

First, according to Judge Davis, the automatic-stay provision of Mass. R. Civ. P. 62(a) does not apply to the court’s prior order compelling production of documents. That prior order, Judge Davis wrote, “is most appropriately viewed as ‘an interlocutory or final judgment in an action for an injunction,’ which does not qualify for an automatic stay under Rule 62(a).”

Second, Facebook failed to convince Judge Davis that he should exercise his discretion to stay the prior order.

Recognizing that this Judge represents a difficult audience to convince that the [prior order] is erroneous, the Court—viewing the question as objectively as it reasonably can—sees nothing in Facebook’s motion papers which lead it to believe that Facebook’s pending appeal is likely to prevail. The arguments that Facebook intends to pursue on appeal all were considered and rejected by this Court . . . . The Appeals Court may see it otherwise, but this Court remains of the humble opinion that [its prior order] was correctly decided and is likely to be affirmed—rather than overturned—on appeal. For this reason alone, the Court, acting within its discretion, chooses to deny Facebook’s request for a stay of the [prior order].

The Business Litigation Session of the Massachusetts Superior Court

Docket Number: 1984CV02597-BLS1

Case Name: Attorney General v. Facebook, Inc.

Dates of Decision: March 2, 2020

Judge: Brian A. Davis