Justia Massachusetts Supreme Court Opinion Summaries

Articles Posted in Business Law

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In these consolidated cases, shareholders of a publicly traded corporation (Plaintiffs) filed a complaint claiming that a merger transaction proposed by the board of directors would result in the effective sale of the corporation for an inadequate price. The superior court allowed Defendants’ motion to dismiss for failure to state a claim, concluding that the board owed no fiduciary duty directly to the shareholders and that the action was necessarily derivative. At issue on appeal was whether Plaintiffs must bring their claims against the members of the corporation’s board of directors as a derivative action on behalf of the corporation or may bring it directly on their own behalf. The Supreme Judicial Court affirmed, holding (1) the injury claimed by Plaintiffs, and the alleged wrong causing it, fit squarely within the framework of a derivative action; and (2) Plaintiffs’ claim was properly dismissed because they did not bring their claim as a derivative action. View "International Brotherhood of Electrical Workers Local No. 129 Benefit Fund v. Tucci" on Justia Law

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A stock transfer restriction required a selling shareholder first to offer his stock to the company at his desired price and then, if the company rejected it, to offer it at a price to be determined by arbitrators. Plaintiff invoked this process by tendering an offer to the company (Defendant) but later changed his mind regarding his desire to sell. When Plaintiff sought to withdraw from the process of valuing his stock, Defendant moved to compel arbitration. The superior court denied the motion to compel, concluding that a mere disagreement over the value of stock was legally insufficient to give rise to arbitration. The Supreme Judicial Court affirmed on other grounds, holding (1) a stock valuation may be conducted through arbitration so long as an actual controversy exists regarding the value of the stock; and (2) because the shareholder in this case decided not to sell the stock prior to the commencement of arbitration, the controversy to be arbitrated was rendered moot. View "Vale v. Valchuis" on Justia Law

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Plaintiffs, two motor vehicle dealers and an organization that represents the interests of new automobile and truck franchised dealerships in the state, filed this action against Tesla Motors, Inc., an automobile manufacturer, and Tesla Motors MA, Inc., its Massachusetts subsidiary, alleging violations of Mass. Gen. Laws ch. 93B and conspiracy to violate chapter 93B. The superior court dismissed Plaintiffs’ complaint, concluding that Plaintiffs lacked standing to maintain the action because they were not affiliated dealers of Tesla or Tesla MA. At issue before the Supreme Judicial Court was whether the 2002 amendments to chapter 93B broadened the scope of standing under the statute since the Court’s 1985 decision in Beard Motors, Inc. v. Toyota Motor Distribs., Inc. such that Massachusetts motor vehicle dealers now have standing to maintain an action for an alleged violation of the statute against unaffiliated motor vehicle manufacturers or distributors. The Court affirmed, holding that chapter 93B does not confer standing on a motor vehicle dealer to maintain an action for violation of the statute against a manufacturer with which the dealer is not affiliated. View "Mass. State Auto. Dealers Ass’n, Inc. v. Tesla Motors MA, Inc." on Justia Law

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Plaintiff, Lightlab Imaging, Inc., filed this action against Defendants, a competitor of Lightlab’s and a supplier, alleging, among other causes of action, breach of contract and the covenant of good faith and fair dealing and misappropriation of trade secrets and confidential information. The trial of this action was conducted in multiple phases. The jury returned a verdict in favor of LightLab on issues of liability. At the damages phase, the parties stipulated that LightLab was entitled to nonlost profits damages in the amount of $200,000. Lastly, the trial judge awarded LightLab permanent injunctive relief for trade secrets the jury found had been misappropriated but denied permanent injunctive relief for protection against future appropriation of Lightlab’s trade secrets. The Supreme Judicial Court affirmed but ordered the inclusion of the declaration sought by LightLab, holding (1) the trial judge did not abuse her discretion in excluding opinion testimony from LightLab’s expert economist on the question of certain future lost profits; (2) the trial judge did not err in declining to issue permanent injunctions to protect Lightlab’s trade secrets; and (3) Lightlab was entitled to a declaration of its contract rights that mirrored the language of the order for summary judgment concerning contract formation. View "Lightlab Imaging, Inc. v. Axsun Techs., Inc." on Justia Law

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The City of Quincy (Quincy) served as trustee of the Adams Temple and School Fund and the Charles Francis Adams Fund (together, the Funds) through two boards. The Woodward School for Girls, Inc. (Woodward) has been the sole income beneficiary of the Funds since 1953. In 2007, Woodward filed suit against Quincy seeking an accounting and asserting that Quincy committed a breach of its fiduciary duties in several respects. A probate and family court judge concluded that Quincy committed a breach of its fiduciary duties by failing to invest in growth securities and failing to heed certain investment advice, removed Quincy as trustee, and ordered Quincy to pay a nearly $3 million judgment. The Supreme Judicial Court affirmed the judgment as to liability, reversed with respect to the calculation of damages on the unrealized gains, and remanded, holding (1) Woodward’s claims were not barred on the grounds of sovereign immunity, the Massachusetts Tort Claims Act, or laches; (2) the judgment against Quincy for committing a breach of its fiduciary duties to the Funds was proper; (3) the award of damages was erroneous in the calculation of unrealized gains on the investment portfolio; and (4) the judge did not err in including prejudgment interest. View "Woodward School for Girls, Inc. v. City of Quincy" on Justia Law

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Plaintiff, the former president and chief operating officer of PortfolioScope, Inc., brought suit against Portfolio and two individual defendants alleging, among other claims, breach of contract, violation of Mass. Gen. Laws ch. 93A, tortious interference with Plaintiff’s contractual rights, and fraudulent transfers pursuant to the Uniform Fraudulent Transfer Act. After a bench trial, the judge rendered judgment in favor of Plaintiff. Defendants argued on appeal that the judge erred in her interpretation of an agreement and an amendment, as well as in her analysis of secured transaction principles, and that the errors affected the entire disposition of the case. The Supreme Judicial Court affirmed the judgment of the superior court in almost all respects, holding that any error in the judge’s interpretation of the amendment affected only Plaintiff’s claim for conversion. View "Weiler v. PortfolioScope, Inc." on Justia Law

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Selmark Associates, Inc. and Marathon Sales, Ltd. were closely held Massachusetts corporations that operated manufacturer’s representative companies. In 2001, Evan Ehrlich entered into a series of written agreements providing for the gradual sale of Marathon to Selmark and Ehrlich. Ehrlich subsequently became an employee and minority shareholder of Marathon. After Marathon and Selmark’s then-sole shareholder, David Elofson, terminated Ehrlich’s employment with Marathon, Ehrlich took a job with Tiger Electronics, a competing manufacturer’s representative company, where Ehrlich attempted to solicit several Marathon principals’ business. In 2008, Selmark and Marathon filed a breach of fiduciary complaint against Ehrlich. In response, Ehrlich asserted several counterclaims against Selmark, Marathon, and Elofson. The fury found (1) Ehrlich breached his fiduciary duties to Marathon by soliciting and acquiring Marathon principals for Tiger; (2) Selmark and Elofson committed a breach of contract to Ehrlich and breached their fiduciary duties to Ehrlich; and (3) all the Selmark parties engaged in unfair or deceptive acts or practices. The Supreme Judicial Court (1) affirmed the jury verdict in favor of Selmark and Marathon on their breach of fiduciary duty claim against Ehrlich; (2) affirmed the verdict in favor of Ehrlich on his breach of fiduciary duty counterclaim against Selmark and Elofson; (3) concluded that Ehrlich was entitled to recover on his breach of contract counterclaim but vacated the award of damages and remanded for a new trial on the issue of contractual damages; and (4) concluded that Ehrlich was not entitled to recover under Mass. Gen. Laws ch. 93A. View "Selmark Assocs., Inc. v. Ehrlich" on Justia Law

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The Funds, closed-end investment companies registered under the Investment Company Act of 1940, 15 U.S.C. 80a- 5(a)(1)(2), are organized as Massachusetts business trusts under G.L. c. 182. Plaintiffs are beneficial owners of preferred shares of each of the Funds. The Funds’ declarations of trust state that meetings shall be held “so long as Common Shares are listed for trading on the New York Stock Exchange, on at least an annual basis." After plaintiffs delivered written notice stating an intention to nominate one of their partners for election as a preferred shares trustee of each fund at the 2011 annual meeting, the Funds issued a press release stating that their annual meeting was being rescheduled to July 2012, the last day of the Funds' 2012 fiscal year. Plaintiffs claimed that the bylaws require that an annual shareholders’ meeting be held within 12 months of the last annual shareholder meeting. The Funds argued that the bylaws require only that one meeting be held each fiscal year. The Massachusetts Supreme Court held that "on at least an annual basis" means that a shareholders' meeting for each Fund must be held no later than one year and 30 days after the last annual meeting. View "Brigade Leveraged Capital Structures Fund, Ltd. v. PIMCO, Income Strategy Fund" on Justia Law

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Employee filed suit against Employer, a limited liability company (LLC), and two of its managers under the Massachusetts Wage Act for failing to pay compensation that was allegedly owed to him under an employment contract. The superior court granted the managers' motion to dismiss, concluding that the Wage Act does not, by its plain language, impose individual liability on the managers of an LLC. The Supreme Court vacated the judgment of dismissal, holding that a manager who "controls, directs, and participates to a substantial degree in formulating and determining" the financial policy of the business entity may be a person having "employees in his service" under the Wage Act, and thus may be civilly or criminally liable for violations of the Act. Remanded. View "Cook v. Patient Edu, LLC" on Justia Law

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Demoulas Super Markets (DSM) was a closely held Massachusetts corporation. In this case, several minority Class A stockholders (Sellers), whose offer to sell their shares to DSM was rejected, brought an action seeking a declaration that, consistent with DSM's articles of organization (articles), Sellers could dispose of their shares in any manner they saw fit. DSM counterclaimed, claiming that Sellers could not sell their shares to any buyer who would imperil DSM's status as a Subchapter S Corporation and that Sellers were obligated to reoffer their shares to DSM before selling them to a third party on more favorable terms. A superior court judge declared (1) Sellers were not bound by the articles from freely transferring their stock, and (2) Sellers were not obligated to reoffer their shares to DSM before offering them to a third party on more favorable terms than those arrived at by arbitrators designated in accordance with the articles. The Supreme Court affirmed, holding (1) Sellers were not bound by fiduciary duty and could sell their shares regardless of whether the buyer's ownership would terminate DSM's S corporation status; and (2) DSM's articles did not create a preemptive right of first offer held by DSM. View "Merriam v. Demoulas Super Markets, Inc." on Justia Law