TalentBurst, Inc. v. Collabera, Inc.

507 F. Supp. 2d 261
CourtDistrict Court, D. Massachusetts
DecidedJuly 25, 2008
DocketCivil Action No. 08-10940-WGY
StatusPublished

This text of 507 F. Supp. 2d 261 (TalentBurst, Inc. v. Collabera, Inc.) 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
TalentBurst, Inc. v. Collabera, Inc., 507 F. Supp. 2d 261 (D. Mass. 2008).

Opinion

(2008)

TALENTBURST, INC., Plaintiff
v.
COLLABERA, INC. (f/k/a Global Consultants, Inc.), Defendant.

Civil Action No. 08-10940-WGY.

United States District Court, D. Massachusetts.

July 25, 2008.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I. INTRODUCTION

Raj Mohan Pallerla ("Pallerla"), an employee of the plaintiff TalentBurst, Inc. ("TalentBurst"), left the company to work instead for the defendant Collabera, Inc. ("Collabera"). This turn of events gives rise to the instant suit, in which Talent-Burst asserts three causes of action against Collabera.

First, TalentBurst asserts a claim of breach of fiduciary duty, alleging that Pallerla's defection to Collabera was a violation of the fiduciary duty of loyalty that he owed to TalentBurst and that Collabera should be held liable for "aiding and abetting" the violation because it provided Pallerla with encouragement and assistance. Second, TalentBurst asserts a claim of tortious interference with contractual and advantageous relations, alleging Collabera's offer of employment induced Pallerla to breach a contractual obligation he had to TalentBurst by violating a covenant not to compete or solicit customers. Finally, TalentBurst asserts that Collabera's actions in assisting Pallerla to breach his fiduciary duty and in interfering with contractual relations constitute a violation of Massachusetts General Laws chapter 93A section 11 ("chapter 93A").

Collabera moves to dismiss the claim in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.

A. Procedural Posture

TalentBurst filed its complaint in the Massachusetts Superior Court sitting in and for the county of Middlesex in May 2008. See Compl. [Doc. 1 Ex. 1] (including summons that gives date of service as May 15, 2008). Collabera removed the suit to this Court on June 3, 2008. Notice of Removal [Doc. 1]. The next day, June 4, Collabera filed the motion to dismiss [Doc. 5] and a supporting memorandum ("Mem. in Supp.") [Doc. 6]. TalentBurst filed a memorandum in opposition ("Mem. in Opp.") on June 17, 2008. On July 8, Collabera filed a reply memorandum [Doc. 13].

B. Alleged Facts

TalentBurst is a corporation that provides information technology staff to clients.[1]See Compl. ¶ 2. It hired Pallerla as a systems administrator in February 2006. Id. ¶ 4. As a condition of Pallerla's employment, he was required to sign an employment agreement that contained a Covenant Not to Compete or Solicit Customers (the "Covenant"). Id. ¶ 6. The Covenant, which all TalentBurst employees are required to sign, is designed to protect TalentBurst's "substantial goodwill, valuable relationships with customers, trade secrets, and particular means or methods of conducting its business." Id. ¶ 5. Of particular relevance here, the Covenant prohibited Pallerla from accepting certain employment for a period of twelve months after he stopped working at TalentBurst.[2]Id. ¶ 6.

Collabera also is in the business of providing information technology staff to clients. Id. ¶ 8. In March 2006, Talent-Burst signed a consulting services agreement with Collabera, which provided that TalentBurst staff would perform work for Collabera's clients. Id. ¶ 8. In April 2006, Pallerla was assigned to work on a longterm project for one of Collabera's clients ("the End Client") under the terms of the agreement. Id. ¶ 9. Pallerla continued in this assignment without incident until September 27, 2007. On that date, Pallerla notified TalentBurst that he was resigning, effective the next day. Id. ¶ 11. In response, TalentBurst reminded Pallerla of the terms of the Covenant. Id. ¶ 12. Pallerla ceased working for TalentBurst on September 28, 2007. See id. ¶ 11.

On November 28, 2007, TalentBurst discovered that Pallerla was employed by Collabera and that, despite his resignation from TalentBurst, he had continued to work on his assignment for the End Client without any interruption. Id. ¶ 15. This employment situation, which dictates the conclusion that Pallerla immediately entered Collabera's employment upon resigning from TalentBurst, violated the Covenant to which Pallerla agreed. Id. ¶ 13. TalentBurst made inquiries of Collabera regarding Pallerla's employment, to which Collabera "knowingly made false representations... or otherwise sought to mislead TalentBurst concerning its continuing relationship with or employment of Pallerla. Id. ¶ 17. Finally, in January 2008, Collabera admitted that it employed Pallerla and that Pallerla continued working for the End Client at Collabera's direction. See id. ¶ 18.

In February 2008, TalentBurst sent a demand letter to Collabera, in which it informed Collabera of the Covenant that Pallerla had signed.[3]Id. ¶ 19. Collabera responded by claiming that TalentBurst "agreed to waive any restrictive covenant that [it] may have with regard to the hiring or engaging of any former consultants" when it signed the consulting services agreement with Collabera. Id. ¶ 20. TalentBurst denies that this is the case.

C. Federal Jurisdiction

The Court has diversity jurisdiction of this case pursuant to 28 U.S.C. § 1332.

II. ANALYSIS

A. Breach of Fiduciary Duty

Collabera argues that the claim for breach of fiduciary duty must be dismissed because the alleged facts, taken in the light most favorable to TalentBurst, fail to demonstrate that Collabera owed a fiduciary duty to TalentBurst. Mem. in Supp. at 3-4. Collabera reasons that the relationship between it and TalentBurst amounted only to an arms-length business transaction, which generally does not give rise to a fiduciary relationship. Id. at 2-3 (citing Savoy v. White, 139 F.R.D. 265, 267 (D.Mass.1991)) (Bowler, M.J.). Furthermore, Collabera argues that no special circumstances, such as a longstanding relationship or an abuse of a confidence, that might suggest the existence of a fiduciary relationship are present here. Id. at 2, 4. Finally, Collabera notes that the complaint fails even to allege the existence of a fiduciary relationship between the two companies. Id. at 4.

TalentBurst does not disagree with any of these contentions. It, however, asserts that they are irrelevant because it is not proceeding on the theory that Collabera itself breached a fiduciary duty. Instead, TalentBurst asserts that Collabera may be held liable for Pallerla's breach of a fiduciary duty to his employer because it "actively participated[,] substantially assisted in or encouraged the breach to the degree that [it] could not reasonably be held to have acted in good faith." Mem. in Opp. at 4.

The courts of Massachusetts, including the Supreme Judicial Court, have accepted that a defendant can be held liable, even if he has no fiduciary duty to the plaintiff, for assisting a breach of fiduciary duty owed by another. See, e.g., Spinner v. Nutt, 417 Mass. 549, 556, 631 N.E.2d 542 (1994) (noting that "liability arises when a person participates in a fiduciary's breach of duty") (citing Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415 (1991)); Kurker v. Hill, 44 Mass.App. Ct. 184, 190 n.

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Bluebook (online)
507 F. Supp. 2d 261, Counsel Stack Legal Research, https://law.counselstack.com/opinion/talentburst-inc-v-collabera-inc-mad-2008.