FTI, LLC v. Duffy

Massachusetts Appeals Court·Decided July 31, 2024·No. AC 22-P-912·Published

Opinion

NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557- 1030; SJCReporter@sjc.state.ma.us

22-P-912 Appeals Court

FTI, LLC, & another1 vs. ROBERT J. DUFFY & others.2

No. 22-P-912.

Suffolk. November 1, 2023. - July 31, 2024.

Present: Green, C.J., Blake, & Henry, JJ.

Consumer Protection Act, Businessman's claim, Unfair or deceptive act. Contract, Employment, Agreement not to compete, Choice of law clause, Performance and breach. Employment, Constructive discharge. Unlawful Interference. Practice, Civil, Consumer protection case, Directed verdict, Instructions to jury.

Civil action commenced in the Superior Court Department on October 17, 2016.

The case was tried before Kenneth W. Salinger, J.

Derek L. Shaffer, of the District of Columbia (Aliki Sofis also present) for the defendants.

John Siegal, of New York (Daniel M. Kavouras, of Ohio, & Melissa M. Carvalho, of New York, also present) for the plaintiffs.

Stacie A. Kosinski & Alexander W. Read, for Public Justice Center, Inc., amicus curiae, submitted a brief.

HENRY, J. This matter arose when defendants Robert J.

Duffy, Stephen L. Coulombe, and Elliot A. Fuhr resigned their positions with plaintiffs FTI, LLC, and FTI Consulting, Inc. (collectively, FTI), to work for defendant Berkeley Research Group, LLC (BRG), taking with them numerous FTI employees and clients.3 FTI brought suit alleging that the individual defendants were in violation of the noncompetition, nonsolicitation, and confidentiality provisions of their employment agreements and that, acting in concert with BRG, all the defendants wrongfully used FTI's confidential information to poach FTI's employees and clients. Following a trial, a jury found the individual defendants liable for breach of contract4 and BRG liable for tortious interference with contractual relations. In addition, the trial judge found BRG liable for

aiding and abetting breaches of fiduciary duties and for violation of G. L. c. 93A.5 On appeal, the defendants argue that (1) BRG cannot be liable for violation of G. L. c. 93A because the conduct giving rise to that claim did not occur primarily and substantially in Massachusetts6 and (2) the trial judge erred in allowing a directed verdict against them on part of their defense of constructive discharge and in instructing the jury on the remainder of that defense. We agree. Accordingly, we reverse so much of the judgment as holds BRG liable for violation of G. L. c. 93A. In all other respects, the judgment is vacated,

and the matter is remanded for further proceedings consistent with this opinion.7 1. Violation of G. L. c. 93A. a. Background. We begin by summarizing the background pertinent to FTI's claim against BRG for violation of G. L. c. 93A and then, after analysis of the c. 93A issue, summarize the background pertinent to whether the individual defendants were constructively discharged. Where BRG challenges the sufficiency of the evidence (specifically whether the conduct at issue occurred primarily and substantially in Massachusetts), and where the c. 93A claim was tried to the judge, ordinarily we would recite the trial judge's findings absent clear error. See Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass. 459, 470 (2003). Here, however, the parties agreed to waive findings of fact and conclusions of law,8 so we summarize the evidence in the light most favorable to the prevailing party, FTI. See K & K Dev., Inc. v. Andrews, 103 Mass. App. Ct. 338, 344 (2023) (where parties waived detailed findings of fact, we apply standard of review applicable to

judgments entered after jury verdicts); Motsis v. Ming's Supermkt., Inc., 96 Mass. App. Ct. 371, 379-380 (2019).

FTI and BRG are competing consulting firms. FTI is a Maryland company headquartered in Washington, D.C., and BRG is a Delaware company headquartered in California, but they both perform work for clients across the country. Such work included, for example, financial analyses of other companies and assistance with mergers and acquisitions. As noted, the individual defendants all worked for FTI. Duffy and Coulombe resided in Massachusetts and were based out of FTI's Boston office. Fuhr resided in New York and was based out of FTI's New York City office, but he supervised employees in Massachusetts. Despite where they were based, the individual defendants performed work for clients across the country and traveled so frequently that they "liv[ed] out of suitcases."

In or around December 2015, a BRG recruiter reached out to Duffy. Duffy informed Coulombe and Fuhr of his conversations with the recruiter, and the three met with BRG in Washington, D.C., in January 2016. During negotiations, the individual defendants had additional in-person meetings with BRG in New York City. During Duffy's negotiations with BRG, Duffy told BRG that acquiring him was like "buy[ing] a business" and that most of his clients would follow him. On or around April 7, 2016, the individual defendants signed employment agreements with BRG.

Duffy's agreement, which he signed in New York City, included a provision for a "practice growth bonus" that he would earn by bringing employees to BRG. Duffy's, Coulombe's, and Fuhr's agreements with BRG provided that they would not use any confidential information or trade secrets of any other party other than BRG or breach a prior employment restriction. The next day, on April 8, 2016, the individual defendants simultaneously resigned from FTI in a joint telephone call.

In hiring Duffy, BRG sought to acquire other employees and clients of FTI. The trial judge found that "Duffy actively participated in these efforts, and used FTI's confidential information to do so, while he was working for FTI out of its Boston office." The evidence supports a finding that Coulombe created, and Duffy maintained, a spreadsheet that memorialized the defendants' efforts. The spreadsheet was saved under the file name "Super Bowl"9 and listed confidential information about employees' past, current, and projected compensation; the employees' revenue generation; offers BRG made to the employees; and descriptions of whether the employees were "definite," "probable," or "likely" recruits. The judge found that, "[w]ith the help of the [individual defendants], [BRG] succeeded in

convincing [thirty-six] billing professionals -- including the three individual defendants -- to leave FTI and go to [BRG]."10 One-half of the billing professionals who followed the individual defendants to BRG came from FTI's Boston office. Many clients, and their revenues, also left FTI. The trial judge found that, "[s]ince Duffy was the biggest rainmaker in [the] group, well over [one-]half of the client revenues that followed Duffy and his colleagues to [BRG] came from clients serviced by professionals who had been part of FTI's Boston office."

b. Discussion. The defendants' appeal requires us to determine whether "the actions and transactions constituting the alleged unfair method of competition or the unfair or deceptive act or practice occurred primarily and substantially within the commonwealth." G. L. c. 93A, § 11. If the actions and transactions did not occur primarily and substantially within Massachusetts, BRG cannot be liable for violation of G. L. c. 93A. On this issue, because "the burden of proof shall be upon the person claiming that such transactions and actions did not occur primarily and substantially within the commonwealth,"

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