PSD Wins Dismissal in Federal Court of a Defamation Claim Against a Book Author Arising From Calling Someone “Retired,” as well as Dismissal of Claims for Violations of the Stored Communications Act, Identity Theft and Invasion of Privacy

A Federal Court in the District of New Hampshire granted a motion to dismiss brought by PSD on behalf of an author and former CEO of an international youth sports company. The plaintiff was the wife of a former CEO of the company. The wife claimed she had been defamed in a book authored by the successor CEO that referred to a character, whom she believed was based on her, as, among other things, “just retired” and “ignorant.” She also brought claims for alleged violations of the Stored Communications Act, identity theft, and an invasion of privacy. The Court held that the phrase “just retired” was not defamatory on its face and related comments appeared mere opinions, such as a sarcastic reference to the character as a “classy lady” and a statement that the character was “ignorant.” The Court rejected other claims finding that they could not by based on documents shared with a corporate Google account.

Barry Pollack and Phil Rakhunov led the PSD team winning the motion to dismiss.

PSD represents DGI-BNSF Corp., a real estate management company, against TRT Leaseco, LLC, in the Southern District of New York, in an action involving the terms that would govern the availability of approximately $180 million in net operating losses. After a multi-week bench trial, during closing arguments, PSD founding partner Barry Pollack argued, with respect to the CEO that controlled the defendant: “all I can say are inconsistencies and evasiveness. He just wasn’t there to answer your Honor.” The Court responded in agreement: “I did not find him to be particularly credible.” With respect to the CEO of PSD’s client, the Court commented that he “was an extremely credible witness” who “knew what he was doing, he knew what he was buying, there were other ways this deal could be structured, so that he could take care of the phantom income, and he was also prepared to pay the taxes, so that he had several — for at least some period of time, he was prepared to pay the taxes, so that it was not like he was in a fire sale circumstance.” The matter settled shortly thereafter.

Shortly before trial, PSD won a motion for leave to amend its client’s Complaint to add a fraudulent inducement claim. The amended claim attributed to the defendant alleged misrepresentations by the CEO of what subsequently became its majority stockholder. A 12-page memorandum opinion, dated November 6, 2019, addressed this somewhat novel issue.

PSD partners Barry Pollack and Phil Rakhunov served as trial counsel

On May 12, 2020, Chancellor Bouchard of the Delaware Chancery Court issued a 28-page post-trial ruling. In the decision, the Court directed judgment for PSD’s corporate client on a claim that it failed to deliver books and records pursuant to the company’s operating agreement. The decision followed a one-day trial. Aside from the production of portions of a couple of documents to which PSD’s client made no objection, PSD’s client prevailed in the entirety on every issue. Click here to view a copy of the decision.

The Plaintiff equityholder claimed the company’s Class A members improperly removed him as CEO. He also claimed that he was entitled to access numerous categories of books and record, including massive amounts of electronic files. In the written opinion, the Court acknowledged that Plaintiff’s burden to show a “credible basis” to suspect wrongdoing amounted to the lowest burden recognized under Delaware law. Nevertheless, the Court found that Plaintiff failed to meet his minimal burden at trial.

PSD lawyers Barry Pollack and Josh Solomon served as lead trial counsel.

On April 10, 2020, a federal appellate court in Boston ruled for PSD’s client. In the case, a group of church members sought a seven-figure damages award. The claims arose from an insurance coverage dispute. In the ruling, the court focused on a coverage exclusion. Justice David Souter authored the opinion.

Background

On January 15, 2017, a group of church members voted to withdraw from a Presbyterian organization. The “break-away” group called themselves the “Newton Covenant Church.”

On March 17, 2017, the insured Presbyterian church brought a lawsuit in state court against the “break-away” group. The state court complaint alleged trespass and conversion. According to the complaint, the “break-away” group exerted control over real property and bank accounts. As alleged, the dispute followed the church’s “progressive stances” on same-sex marriage and the ordination of gay, lesbian, bisexual and transgender ministers.

On March 23, 2017, the “break-away” group changed the church’s name at the Secretary of the Commonwealth from “Newton Presbyterian Church” to “Newton Covenant Church.” The “break-away” group then submitted a notice to the Great American Insurance Company seeking coverage in the state court action under a Directors and Officers insurance policy. Later, the “break-away” group lost a summary judgment motion, Then, the “break-away” group settled the state court action.

In the federal case that followed, the “break-away” group challenged a denial of coverage.

The trial court granted PSD’s motion for summary judgment that invoked a coverage exclusion.

Appellate Ruling for PSD’s Client

Writing for the court, Justice Souter rejected the “break-away” group’s arguments. In the opinion, the court found no significance to the change of corporate status. The court held:

[T]o the extent that NCC claims it was a distinct organization even prior to its separate registration with the State, it was not within the definition of an insured “Organization.” To the extent that NCC claims instead that it was a segment of the original NPC at the time of the state court complaint, coverage is barred for another reason: § IV.H of the Policy. That provision, one of a handful of “Exclusions” under the Policy, precludes coverage for claims between insureds…. And, finally, to the extent that NCC claims it was the original organization that had simply undergone a formal name change, once again that would implicate §IV.H’s exclusion.

In this case, PSD lawyer Ashly Scheufele argued the appeal for the Great American Insurance Company. Barry Pollack and Lauren Riddle also worked on the matter. Click here for a copy of the decision.

On April 2, 2020, PSD won a motion to transfer federal court claims from Michigan to Maine. In the case, a former employee sued Legacy Global Sports, LP and Premier Sports Events, LLC. By his complaint, the employee sought millions of dollars from PSD’s clients, PSE and Legacy. The former employee claimed he had been discriminated against as a male. Furthermore, he alleged breaches of certain employment and bonus agreements. Prior to the events he complained about, this employee joined the business as part of a buyout of a company he started.

Forum Selection Clause

Importantly, the Purchase & Sale Agreement contained a forum selection clause requiring the resolution of any dispute between the parties in a Maine court. By contrast, the employee signed that agreement for the corporate seller. With respect to the P&S Agreement, he did not sign in his individual capacity. His employment and bonus agreements contained choice-of-law provisions that provided for the application of Maine law. Those agreements lacked forum selection clauses.

Ruling

Despite the presence of individual claims, the federal court found the former employee “closely related” to the selling party and personally bound by the forum selection clause in the P&S Agreement. The ruling applied even for claims arising under his employment agreement and bonus agreement.

The federal court explained:

Lukasak did not personally sign the P&S Agreement. However, he admits that he was intimately related to the P&S Agreement: He signed the P&S Agreement twice, in his capacity as representative of both Premier Sports Events, Inc, and Premier Sports Events, LLC. In doing so, Lukasak represented the entirety of the seller side of the agreement. He was closely involved in the buyout deal, as evidenced by the fact that he negotiated the deal on the seller side. The buyout was the sole motivating factor for the creation of both his Employment Agreement and his Bonus Incentive Agreement: Without the buyout, the supplemental contracts that bind Lukasak personally would not exist. Taking all these facts together, it is clear to the Court that all of the contracts signed on February 1, 2014 were part of the same transaction and that they form one agreement.

As a result, the case will proceed if at all in Maine. Click here for a copy of the decision.

PSD lawyers Barry Pollack, Phil Rakhunov, Ashly Scheufele and Lauren Riddle represented PSE and Legacy.

PSD Attorneys Barry Pollack, Peter Duffy and Lauren Riddle successfully defended a New York private equity fund and its North Carolina portfolio company. The North Carolina business court tossed a lawsuit brought by Aym Technologies. The plaintiff claimed that CBC, LLC, a behavioral care company, hired a contractor who helped Aym attempt a vertical integration plan focused on a roll-up of North Carolina healthcare companies. According to Aym’s theories, Aym and a private equity fund managed by Scopia Capital Management then proceeded successfully implement a roll-up strategy. Aym claimed more than $20 million in damages.

The North Carolina business court agreed with CBC and Scopia that Aym failed to prove its plan constituted a trade secret, failed to prove the information was misappropriated, and failed to prove that it had any pertinent enforceable restrictions on the contractor who joined CBC.

The court issued a forty-page decision granting summary judgment.

Scopia and CBC have separate contract claims against Aym that remain pending in New York Supreme Court arising from a non-disclosure agreement that Aym’s principal signed when expressing interest in investing in CBC.

On August 2, 2019, PSD lawyers Barry Pollack, Ashly Scheufele and Lauren Riddle won a motion to dismiss in the United States District Court for the District of Massachusetts, in Newton Covenant Church versus Great American Insurance Company.

The Newton Covenant Church sued Great American, claiming that the insurance carrier failed to provide coverage when it and its members were sued by another faction of another church concerning which entity and individuals had the right to certain church property.

In a written opinion, the District Court agreed with PSD’s position that the plaintiffs did not constitute “Insureds” under the pertinent insurance policy because they were sued as trespassers not as directors or officers. The court also agreed that the “Insured versus Insured” clause would exclude coverage if any of the defendants constitutes an Insured.

In Carr v. New Enterprise Associates, et al., PSD represented Ken Carr, the founder of a medical technology company specializing in the use of ablation catheters for treatment of cardiac atrial fibrillation and high blood pressure. On April 4, 2019, the Delaware Court of Chancery approved a class action settlement in which PSD represented the lead plaintiff.

Carr alleged that New Enterprise Associates, certain of its funds and partners, and directors and officers of Advanced Cardiac Technologies, Inc., breached fiduciary duties to a class of minority stockholders by selling a warrant to Abbott Laboratories on the same day NEA completed two other transactions with Abbott involving two other portfolio companies. Carr alleged further that the defendants completed a financing round that diluted the class members’ interests just before engaging in the transaction with Abbott that they knew would happen but did not adequately disclose to the class members.

Chancellor Bouchard found that Carr was not just an adequate class representative, but an exemplary one. Chancellor Bouchard also found that PSD was not just an adequate lead counsel, but also provided “excellent” and “outstanding” representation generating a $9 million dollar settlement for the class that represented what they would have received if the company had been sold pre-dilution for $375 million. The class members also retained their stock interests in the settlement. Chancellor Bouchard also approved the class as defined in the settlement and issued Judgment granting Carr’s request for an extra incentive fee of $175,000 and an award of attorneys’ fees and costs.

When approving the substantial fee award for PSD, Chancellor Bouchard said, with respect to “the Pollack firm, they did — I’ll just say this very bluntly — an outstanding job in this case pursuing their clients’ interest in an aggressive but balanced manner.”

 

Barry Pollack and Josh Solomon served as lead counsel of record for the class.

On March 18, 2019, PSD Partner Barry Pollack spoke on NBC News about the source of the tipster leading to the nationwide college admissions scam charges.