Ecological Fibers, Inc. v. Kappa Graphic Board, B.V.

345 F. Supp. 2d 13, 2004 U.S. Dist. LEXIS 23905, 2004 WL 2711649
CourtDistrict Court, D. Massachusetts
DecidedSeptember 30, 2004
DocketCIV.A. 03-40159-NMG
StatusPublished
Cited by5 cases

This text of 345 F. Supp. 2d 13 (Ecological Fibers, Inc. v. Kappa Graphic Board, B.V.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ecological Fibers, Inc. v. Kappa Graphic Board, B.V., 345 F. Supp. 2d 13, 2004 U.S. Dist. LEXIS 23905, 2004 WL 2711649 (D. Mass. 2004).

Opinion

MEMORANDUM & ORDER

GORTON, District Judge.

Plaintiff Ecological Fibers, Inc. (“Ecological”) has brought this action alleging that defendant Kappa Graphic Board B.V. (“Kappa”) breached a contract between the parties in bad faith and that the breach constituted an unfair business practice in violation of M.G.L. c. 93A. Kappa now moves to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6).

I. Factual Background

Defendant Kappa manufactures “graphic boards” used to bind books and Ecological buys, “converts,” i.e. cuts them to custom sizes, and resells them throughout North America. On June 28, 2000 the parties entered into an Asset Purchase Agreement whereby Kappa agreed to purchase Ecological’s conversion equipment and Ecological agreed to train Kappa employees to use that equipment.

*14 On July 7, 2000 the parties entered into a separate Sales Agency Agreement (“the Agreement”) whereby Kappa appointed Ecological as its exclusive independent graphic board sales agent in certain territories in the United States and Canada. The Agreement expires on June 30, 2005. The purpose of the Agreement, according to Ecological, was to prevent Kappa from competing with Ecological for the sale of graphic boards in its territory now that Kappa controls all aspects of the business as a result of the Purchase Asset Agreement.

On June 80, 2003 Kappa gave Ecological written notice that it intended to terminate the Agreement on July 30, 2003. Kappa alleges that Ecological breached Section 9 of the Agreement by failing to meet certain “budget tonnage” requirements set forth therein and Section 7(a) of the Agreement by failing to make reasonable efforts to promote Kappa’s products in the marketplace. Ecological denies the allegations and claims that Kappa has, by virtue of its recent actions, breached the Agreement itself. Ecological also contends that Kappa never intended to fulfill its obligations under the Agreement for the five-year term and that it has, therefore, engaged in unfair and deceptive business practices in violation of the Massachusetts Consumer Protection Act, M.G.L. c. 93A (“the 93A claim”). Ecological seeks in-junctive relief, compensatory and punitive damages and attorneys’ fees.

On July 25, 2003 this Court denied by endorsement Ecological’s ex parte motion for a temporary restraining order (Docket No. 4) which sought to compel Kappa to perform under the terms of the Agreement. The parties then appeared before this Court on August 12, 2003 at oral argument of Ecological’s motion for a preliminary injunction.

On September 4, 2003 this Court denied Ecological’s motion for a preliminary injunction (Docket No. 11), finding that none of the prerequisites for injunctive relief had been met. Kappa now moves to dismiss Count II (the 93A claim) of the complaint.

II. Legal Analysis

A. Standard of Review

A court may not dismiss a complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6) “unless it appears, beyond doubt, that the [pjlaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Judge v. City of Lowell, 160 F.3d 67, 72 (1st Cir.1998)(quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In considering the merits of a motion to dismiss, the court may look only to the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the complaint and matters of which judicial notice can be taken. Nollet v. Justices of the Trial Court of Mass., 83 F.Supp.2d 204, 208 (D.Mass.2000) aff'd, 248 F.3d 1127 (1st Cir.2000). Further, the court must accept all factual allegations in the complaint as true and draw all reasonable inferences in the plaintiffs favor. Langadinos v. American Airlines, Inc., 199 F.3d 68, 69 (1st Cir.2000). If the facts in the complaint are sufficient to state a cause of action, a motion to dismiss the complaint must be denied. See Nollett, 83 F.Supp.2d at 208.

B. Analysis

In Massachusetts, the Consumer Protection Act provides a private cause of action for victims of unfair business practices. See M.G.L. c. 93A § 2, 11; Anthony’s Pier Four, Inc. v. HBC Associates, 411 Mass. 451, 474, 583 N.E.2d 806 (1991). Section two of Chapter 93A states, “[u]n-fair methods of competition and unfair or *15 deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” Id. § 2(a). To determine whether a practice is- unfair, the court focuses on “the nature of challenged conduct and on the purpose and effect of that conduct as the crucial factors in making [an unfairness determination].” Massachusetts Employers Insurance Exchange v. Propac-Mass, Inc., 420 Mass. 39, 42, 648 N.E.2d 435 (1995).

In some cases the facts giving rise to a breach of contract claim will also give rise to a 93A claim. See id. However, in order for a 93A claim to succeed, the law requires more than a mistake or honést dispute concerning a contract. Duclersaint v. Federal National Mortgage Association, 427 Mass. 809, 814, 696 N.E.2d 536 (1998). Some level of bad faith must be present. Anthony’s Pier Four, 411 Mass. at 474-75, 583 N.E.2d 806. The Massachusetts Supreme Judicial Court has provided guidance >as to the misbehavior by a contracting party that will properly invoke Chapter 93A. Propac-Mass, 420 Mass. at 42, 648 N.E.2d 435; Anthony’s Pier Four, 411 Mass. at 475, 583 N.E.2d 806.

In Propac-Mass, an unincorporated insurance exchange (“the Exchange”) made a 5-year agreement with Propac for Pro-pac to serve as the Exchange’s attorney-in-fact. 420 Mass. at 40, 648 N.E.2d 435. At the end of the term, an advisory committee of the Exchange gave notice to Propac that the agreement would not be renewed. Id. Propac, instead of honoring the termination, began a campaign to maintain its office and inhibit an orderly transition to a new attorney-in-fact. Id. That campaign included contacting the subscribers to the Exchange and informing them that their insurance would be in jeopardy if they cooperated with the signing of a new power of attorney. Id.

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345 F. Supp. 2d 13, 2004 U.S. Dist. LEXIS 23905, 2004 WL 2711649, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ecological-fibers-inc-v-kappa-graphic-board-bv-mad-2004.