Alternative Systems v. Synopsys CV-00-546-B 02/19/03
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Alternative Systems Concept, Inc.
v. Civil No. 00-546-B Opinion No. 2003 DNH 026 Synopsys, Inc.
MEMORANDUM AND ORDER
Alternative Systems Concepts, Inc. ("ASC") has sued
Synopsys, Inc. for breach of contract as the successor to
Languages for Design Automation, Inc. ("LEDA"). ASC originally
claimed that LEDA breached a commitment it made in a Letter of
Understanding ("LOU") to engage in a good faith effort to
negotiate a permanent marketing agreement with ASC. Faced with
overwhelming evidence that LEDA fulfilled its obligation under
the LOU, ASC has abandoned this argument. It now contends that
Synopsys is liable because LEDA breached a separate oral
agreement to make the LOU permanent. As I explain in greater
- 1 - detail below, the doctrine of judicial estoppel bars ASC from
making this argument because ASC disavowed any such basis for its
claim in an earlier pleading. Accordingly, I grant Synopsys's
motion for summary judgment challenging this claim.
I. BACKGROUND
A. Facts
ASC and LEDA entered into the LOU on March 29, 1999. The
LOU made ASC LEDA's exclusive marketing agent in the United
States for its "Proton" product line from April 1, 1999 until
September 30, 1999.
The LOU provides that:
[a]fter the expiration of this LOU, both companies might enter into a formal long-term agreement to appoint ASC as an agent to market and sell PROTON Products in the [United States].
LOU at 5 2. It also states that "LEDA and ASC will negotiate in
good faith a permanent agreement based on experiences during the
term of this LOU," but recognizes that "neither LEDA nor ASC has
any obligation in entering such a permanent agreement." LOU at
5 19.
- 2 - The parties exchanged a series of e-mails and held several
meetings to discuss the possibility of extending the LOU. On
September 1, 1999, representatives of ASC and LEDA met in
Grenoble, France to discuss the issue. At the meeting. Serge
Maginot, LEDA's Managing Director, assured Alexander Zamfirescu,
ASC's Vice President of Engineering, that "all was satisfactory
in regard to a permanent agreement." Aff. of Alexander
Zamfirescu at 5 13. On September 20, 1999, LEDA agreed by e-mail
to extend the territorial limits of the LOU to include Canada.
See id. at 5 14. On October 5, 1999, the parties met in Orlando,
Florida, and engaged in further discussions. While in Orlando,
Maginot told Zamfirescu and Jake Karrfalt, ASC's President, that
it would not be necessary to memorialize the permanent agreement
until LEDA released a new version of its product in the United
States and Canada, which was expected to occur in December or
January. See id. at 5 15. By that point, Karrfalt believed both
that LEDA had agreed to permanently extend the LOU and that the
agreement would be reduced to writing when LEDA released the new
version of its product. Dep. of Jake Karrfalt at 41-44. Maginot
claims, in contrast, that LEDA never agreed to make the LOU
- 3 - permanent. See Dep. of Maginot at 81-82. It is undisputed that
the parties never executed a written agreement to permanently
extend the LOU.
ASC continued to serve as ASC's marketing agent until
Synopsys acguired LEDA in January 2000. Thereafter, Synopsys
notified ASC that it would no longer extend the LOU.
B. Procedural History
ASC's First Amended Complaint charges that Synopsys is
liable for breach of contract because its predecessor, LEDA,
"breached its agreement to negotiate a permanent agreement in
good faith and to honor the Canadian distributorship." First
Amended Compl. at 5 19. Synopsys later moved to dismiss ASC's
contract claim on the ground that it was barred by the statute
of frauds. See Def's Motion to Dismiss First Amended Complaint
at 9 (Doc. No. 14). Synopsys based its argument on the
assumption that ASC was claiming that Synopsys had breached an
oral agreement between the parties to make the LOU permanent.
See id. In response, ASC stated " [p]laintiff is not claiming
that defendants breached an agreement to enter into a long-term
contract. Plaintiff's contract claim is that LEDA breached its
- 4 - agreement to negotiate in good faith . . . Pit's Mem. Supp.
Obj. to Mot. to Dismiss First Amend. Compl. at 4-5 (Doc. No. 15)
(emphasis added). Because the parties to the LOU could complete
this negotiation process within a year, ASC reasoned, its
contract claim was covered by a recognized exception to the
statute of frauds. I relied on this argument in rejecting
Synopsys's motion to dismiss the contract claim. See August
Order at 5 n.2.
II. STANDARD OF REVIEW
Summary judgment is appropriate only "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(c) . A genuine issue is one "that properly can be resolved
only by a finder of fact because [it] may reasonably be resolved
in favor of either party." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 250 (1986). A material fact is one that affects the
outcome of the suit. See id. at 248.
- 5 - In ruling on a motion for summary judgment, I must construe
the evidence in the light most favorable to the non-movant. See
Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st Cir. 2001). The
party moving for summary judgment, however, "bears the initial
responsibility of informing the district court of the basis for
its motion, and identifying those portions of [the record] which
it believes demonstrate the absence of a genuine issue of
material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Once the moving party has properly supported its
motion, the burden shifts to the nonmoving party to "produce
evidence on which a reasonable finder of fact, under the
appropriate proof burden, could base a verdict for it; if that
party cannot produce such evidence, the motion must be granted."
Ayala-Gerena v. Bristol Myers-Sguibb Co., 95 F.3d 86, 94 (1st
Cir. 1996) (citing Celotex, 477 U.S. at 323; Anderson, 477 U.S.
at 249). Neither conclusory allegations, improbable inferences,
or unsupported speculation are sufficient to defeat summary
judgment. See Carroll v. Xerox Corp., 294 F.3d 231, 236-37 (1st
Cir. 2 002).
- 6 - III. DISCUSSION
Synopsys has moved for summary judgment with respect to
ASC's breach of contract claim on the ground that the undisputed
evidence demonstrates that it fulfilled its contractual
obligation to ASC to make a good faith effort to negotiate a
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Alternative Systems v. Synopsys CV-00-546-B 02/19/03
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Alternative Systems Concept, Inc.
v. Civil No. 00-546-B Opinion No. 2003 DNH 026 Synopsys, Inc.
MEMORANDUM AND ORDER
Alternative Systems Concepts, Inc. ("ASC") has sued
Synopsys, Inc. for breach of contract as the successor to
Languages for Design Automation, Inc. ("LEDA"). ASC originally
claimed that LEDA breached a commitment it made in a Letter of
Understanding ("LOU") to engage in a good faith effort to
negotiate a permanent marketing agreement with ASC. Faced with
overwhelming evidence that LEDA fulfilled its obligation under
the LOU, ASC has abandoned this argument. It now contends that
Synopsys is liable because LEDA breached a separate oral
agreement to make the LOU permanent. As I explain in greater
- 1 - detail below, the doctrine of judicial estoppel bars ASC from
making this argument because ASC disavowed any such basis for its
claim in an earlier pleading. Accordingly, I grant Synopsys's
motion for summary judgment challenging this claim.
I. BACKGROUND
A. Facts
ASC and LEDA entered into the LOU on March 29, 1999. The
LOU made ASC LEDA's exclusive marketing agent in the United
States for its "Proton" product line from April 1, 1999 until
September 30, 1999.
The LOU provides that:
[a]fter the expiration of this LOU, both companies might enter into a formal long-term agreement to appoint ASC as an agent to market and sell PROTON Products in the [United States].
LOU at 5 2. It also states that "LEDA and ASC will negotiate in
good faith a permanent agreement based on experiences during the
term of this LOU," but recognizes that "neither LEDA nor ASC has
any obligation in entering such a permanent agreement." LOU at
5 19.
- 2 - The parties exchanged a series of e-mails and held several
meetings to discuss the possibility of extending the LOU. On
September 1, 1999, representatives of ASC and LEDA met in
Grenoble, France to discuss the issue. At the meeting. Serge
Maginot, LEDA's Managing Director, assured Alexander Zamfirescu,
ASC's Vice President of Engineering, that "all was satisfactory
in regard to a permanent agreement." Aff. of Alexander
Zamfirescu at 5 13. On September 20, 1999, LEDA agreed by e-mail
to extend the territorial limits of the LOU to include Canada.
See id. at 5 14. On October 5, 1999, the parties met in Orlando,
Florida, and engaged in further discussions. While in Orlando,
Maginot told Zamfirescu and Jake Karrfalt, ASC's President, that
it would not be necessary to memorialize the permanent agreement
until LEDA released a new version of its product in the United
States and Canada, which was expected to occur in December or
January. See id. at 5 15. By that point, Karrfalt believed both
that LEDA had agreed to permanently extend the LOU and that the
agreement would be reduced to writing when LEDA released the new
version of its product. Dep. of Jake Karrfalt at 41-44. Maginot
claims, in contrast, that LEDA never agreed to make the LOU
- 3 - permanent. See Dep. of Maginot at 81-82. It is undisputed that
the parties never executed a written agreement to permanently
extend the LOU.
ASC continued to serve as ASC's marketing agent until
Synopsys acguired LEDA in January 2000. Thereafter, Synopsys
notified ASC that it would no longer extend the LOU.
B. Procedural History
ASC's First Amended Complaint charges that Synopsys is
liable for breach of contract because its predecessor, LEDA,
"breached its agreement to negotiate a permanent agreement in
good faith and to honor the Canadian distributorship." First
Amended Compl. at 5 19. Synopsys later moved to dismiss ASC's
contract claim on the ground that it was barred by the statute
of frauds. See Def's Motion to Dismiss First Amended Complaint
at 9 (Doc. No. 14). Synopsys based its argument on the
assumption that ASC was claiming that Synopsys had breached an
oral agreement between the parties to make the LOU permanent.
See id. In response, ASC stated " [p]laintiff is not claiming
that defendants breached an agreement to enter into a long-term
contract. Plaintiff's contract claim is that LEDA breached its
- 4 - agreement to negotiate in good faith . . . Pit's Mem. Supp.
Obj. to Mot. to Dismiss First Amend. Compl. at 4-5 (Doc. No. 15)
(emphasis added). Because the parties to the LOU could complete
this negotiation process within a year, ASC reasoned, its
contract claim was covered by a recognized exception to the
statute of frauds. I relied on this argument in rejecting
Synopsys's motion to dismiss the contract claim. See August
Order at 5 n.2.
II. STANDARD OF REVIEW
Summary judgment is appropriate only "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(c) . A genuine issue is one "that properly can be resolved
only by a finder of fact because [it] may reasonably be resolved
in favor of either party." Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 250 (1986). A material fact is one that affects the
outcome of the suit. See id. at 248.
- 5 - In ruling on a motion for summary judgment, I must construe
the evidence in the light most favorable to the non-movant. See
Navarro v. Pfizer Corp., 261 F.3d 90, 94 (1st Cir. 2001). The
party moving for summary judgment, however, "bears the initial
responsibility of informing the district court of the basis for
its motion, and identifying those portions of [the record] which
it believes demonstrate the absence of a genuine issue of
material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Once the moving party has properly supported its
motion, the burden shifts to the nonmoving party to "produce
evidence on which a reasonable finder of fact, under the
appropriate proof burden, could base a verdict for it; if that
party cannot produce such evidence, the motion must be granted."
Ayala-Gerena v. Bristol Myers-Sguibb Co., 95 F.3d 86, 94 (1st
Cir. 1996) (citing Celotex, 477 U.S. at 323; Anderson, 477 U.S.
at 249). Neither conclusory allegations, improbable inferences,
or unsupported speculation are sufficient to defeat summary
judgment. See Carroll v. Xerox Corp., 294 F.3d 231, 236-37 (1st
Cir. 2 002).
- 6 - III. DISCUSSION
Synopsys has moved for summary judgment with respect to
ASC's breach of contract claim on the ground that the undisputed
evidence demonstrates that it fulfilled its contractual
obligation to ASC to make a good faith effort to negotiate a
permanent extension of the LOU.
ASC does not argue that Synopsys's motion should be denied
because a genuine factual dispute exists as to whether LEDA
negotiated with ASC in good faith. Instead, it bases its
opposition solely on its new argument that Synopsys is liable
because it breached an alleged oral agreement to make the LOU
permanent. I reject this effort based on the doctrine of
judicial estoppel.
The First Circuit has held that judicial estoppel "should
be employed when a litigant is playing fast and loose with the
courts and when intentional self-contradiction is being used as
a means of obtaining an unfair advantage." Franco v. Selective
Ins. C o ., 184 F.3d 4, 9 (1st Cir. 1999) (guoting Patriot
Cinemas, Inc. v. Gen'1 Cinema Corp., 834 F.2d 208, 212 (1st Cir.
1987)) (internal guotations omitted). "Unfair advantage
- 7 - generally requires that a party have succeeded previously with a
position directly inconsistent with the one it currently
espouses." Id. (quoting Lvdon v. Boston Sand & Gravel Co., 175
F.3d 6, 12-13 (1st Cir. 1999)) (internal quotations omitted).
It is beyond reasonable dispute in this case that ASC
obtained an unfair advantage by contending in opposition to
Synopsys's motion to dismiss that its breach of contract claim
was premised on an alleged breach of the LOU, rather than a
subsequent oral agreement to make the LOU permanent. Had it not
taken this position, I would have dismissed its contract claim
on the basis of the statute of frauds because a permanent
marketing agreement, such as the one ASC now contends existed,
is not capable of being performed within a year and the statute
of frauds renders such contracts unenforceable. It is equally
incontestable that Synopsys was prejudiced by ASC's actions, not
only because I otherwise would have dismissed its breach of
contract claim earlier, but also because Synopsys has since
devoted all of its efforts to defending a claim that ASC has
abandoned. This is precisely the case for which the doctrine of
judicial estoppel was created. IV. CONCLUSION
For the foregoing reasons, I grant Synopsys's motion for
summary judgment (Doc. No. 68) and deny ASC's motion for partial
summary judgment (Doc. No. 63). The clerk shall enter judgment
for the defendant.
SO ORDERED.
Paul Barbadoro Chief Judge
February 19, 2003
cc: John P. Griffith, Esg. Chris Scott Graham, Esg. Irvin D. Gordon, Esg.