Lieber v. President & Fellows of Harvard Coll.

• Decision Date: 10 January 2022
• Docket Number: SJC-13141
• Citation: 179 N.E.3d 19
• Parties: Charles M. LIEBER v. PRESIDENT AND FELLOWS OF HARVARD COLLEGE & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

179 N.E.3d 19

Charles M. LIEBER

v.PRESIDENT AND FELLOWS OF HARVARD COLLEGE & another.¹

SJC-13141

Supreme Judicial Court of Massachusetts, Middlesex.

Argued November 3, 2021.

Decided January 10, 2022.

David R. Suny, Boston, (Andrea L. Davulis, Worcester, also present) for the plaintiff.

Joan A. Lukey (Justin J. Wolosz, Boston, also present) for the defendants.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, & Georges, JJ.

BUDD, C.J.

The plaintiff, Charles M. Lieber, appeals from the denial of a motion for a preliminary injunction, whereby Lieber sought to require his employer, President and Fellows of Harvard College,² to provide advancement under a written indemnification policy of counsel fees and expenses that he is incurring in defending against certain criminal charges. We conclude that the judge did not commit an abuse of discretion and affirm the denial of the motion.

1. Background. We summarize the facts, which have reasonable support in the record. See Doe v. Worcester Pub. Sch., 484 Mass. 598, 601, 143 N.E.3d 415 (2020). Since 1991, Lieber has been a professor at Harvard, where, among other things, he has served as the principal investigator of a research group funded primarily through grants from two Federal agencies, the Department of Defense (DOD) and the National Institutes of Health (NIH). When applying for and receiving those grants, Harvard and Lieber are required to make certain disclosures regarding foreign collaborations and significant financial conflicts of interest, including funds received from a foreign country.

According to correspondence later found on Lieber's Harvard e-mail account, between 2011 and 2013, he entered into three contracts with Wuhan University of Technology (WUT), located in the People's Republic of China (China),³ pursuant to which he was to assemble a research team, engage in research and development, mentor students, and publish articles over periods of three to five years, in return for the payment of certain expenses and compensation, including, under two of the contracts, monthly salaries upwards of $50,000. One of the contracts related to Lieber's participation in a program designed by the Chinese government to attract foreign scientific talent, called the "Thousand Talents Plan."⁴ From 2012 to as late as 2017, Lieber provided services and received payments under the WUT contracts, which, at his direction, were distributed to him by depositing one-half of the funds in a Chinese bank account set up in his name and providing the other half to him in cash when he visited China.

Since at least 2012, Harvard, in part to bolster compliance with the disclosure requirements related to Federal grants, has had a policy requiring faculty members like Lieber to submit annual outside financial activity reports (FARs) and periodic financial conflict of interest disclosure forms (FCOIs) identifying affiliations with, and payments from, foreign sources. Between 2012 and 2019, Lieber submitted a total of seventeen FARs and FCOIs, none of which identified any contracts or affiliations with, or payments from, WUT.

In 2018, NIH and DOD, having both become aware of Lieber's apparent involvement with WUT and the Thousand Talents Plan, began inquiring whether he and Harvard had made proper disclosures in grant applications and related submissions. During an ensuing interview with DOD investigators, Lieber denied ever having been asked to participate in the Thousand Talents Plan.⁵ Then, in a written response to an inquiry from NIH, Harvard, in reliance on assurances from Lieber⁶ and apparently unaware of his e-mail communications, denied he had any appointments or affiliations with WUT, other than a brief "visiting scientist appointment" in 2012,⁷ and stated that WUT had falsely exaggerated his involvement with it in subsequent years. Harvard further noted in the letter to NIH that "Lieber has represented that he is not and has never been a participant in" the Thousand Talents Plan.

In 2020, Lieber was indicted in the United States District Court for the District of Massachusetts on two counts of making false statements to a government agency. According to the indictment, Lieber, as evidenced by his e-mail communications, made false statements when he separately informed, or caused Harvard to inform, DOD and NIH that he had never participated, or been solicited to participate, in the Thousand Talents Plan.⁸ Subsequently, he was indicted on two counts of filing a false tax return and two counts of failing to report foreign bank and financial accounts, which related to his failure to identify the payments received and a bank account he established in China in connection with the WUT contracts. Lieber pleaded not guilty to all charges.

Following his indictment, Lieber made a written request for indemnification and advance payment of his legal fees and expenses pursuant to Harvard's "Indemnification Policy." Subject to certain enumerated exclusions, the policy provides for the indemnification of "Qualified Persons"⁹ against liabilities and expenses incurred in connection with, among other things, the defense of criminal proceedings the person may be involved in or threatened with by reason of serving in a "Covered Role." A "Covered Role" is "any administrative, executive, managerial, professional or fiduciary role [at Harvard], or, at the request of and for the benefit of [Harvard], in any other corporation, trust or organization." Due "to the substantial autonomy and freedom afforded to a faculty member's teaching, research and writing," however, indemnification is not extended to those activities as a "per se rule." Instead, the determination is left to Harvard's discretion, and indemnification can only be extended to such activities when they are within the scope of the faculty member's employment. The policy also provides that Harvard shall pay the legal fees and expenses "in advance of the final disposition thereof," upon request unless "it is determined that it is reasonably likely that the person seeking indemnification will not be entitled to indemnification under th[e] policy." All "determinations" under the policy are required to be made, in "good faith discretion," by Harvard's executive vice-president.

To that end, Katherine N. Lapp, Harvard's executive vice-president, responded to Lieber's requests. With regard to the false statement charges, Lapp questioned whether Lieber was acting in a covered role at the time of the activities alleged in the indictment. Nonetheless, given that the criminal proceedings were in the earliest stages, she decided to defer the indemnification determination as to those charges. As for the second set of charges, Lapp determined that Lieber was not eligible for indemnification because, in Harvard's view, the allegations of filing false tax returns and failing to report a foreign bank account "fall outside" both the definition of a covered role and the scope of Lieber's employment.

Lapp further informed Lieber that Harvard would not provide any indemnification payments in advance because, in Harvard's view, it was "reasonably likely" that he would not be entitled to indemnification in the final analysis. Specifically, Lapp determined that indemnification was likely to be precluded under any of a number of exceptions set forth in the policy, including where a qualified person is adjudicated or determined not to have acted in good faith or in the reasonable belief that his or her actions were in the best interests of Harvard; is adjudicated or determined to have engaged in criminal misconduct, intentional wrongdoing, recklessness, or gross negligence; or is found to have committed an act or omission that he or she knew or should have known was a violation of Harvard policies. As to the last of these exceptions, Lapp concluded that based on Lieber's contemporaneous e-mail correspondence, including his execution of the WUT contracts, it was reasonably likely he had lied or consciously withheld or misrepresented facts to Harvard and the government and failed to make required disclosures in FARs and FCOIs over multiple years, in violation of Harvard policies.¹⁰

Thereafter, Lieber commenced the present action, asserting claims against Harvard and Lapp for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory judgments with respect to both the failure to provide indemnification and refusal to provide advancement.¹¹ He also filed the motion at issue, seeking a preliminary injunction requiring Harvard to provide advancement of his legal fees and expenses. Following a nonevidentiary hearing, a judge in the Superior Court issued a written decision denying the injunction. Lieber appealed from the judge's ruling¹² and applied for direct appellate review, which we granted.¹³

2. Standard of review. "We review the grant or denial of a preliminary injunction to determine whether the judge abused [her] discretion, that is, whether the judge applied proper legal standards and whether there was reasonable support for [her] evaluation of factual questions." Commonwealth v. Fremont Inv. & Loan, 452 Mass. 733, 741, 897 N.E.2d 548 (2008), citing Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 615, 405 N.E.2d 106 (1980) ( Cheney ). In making our determination, we examine the same factors as the motion judge: whether the moving party has shown "that success is likely on the merits; irreparable harm will result from denial of the injunction; and the risk of irreparable harm to the moving party outweighs any similar risk of harm to the opposing party." Doe v. Superintendent of Sch. of Weston, 461 Mass. 159, 164, 959 N.E.2d 403 (2011), citing Cheney, supra at 616-617, 405 N.E.2d 106. Where, as here, no evidentiary hearing was held and the record consists of affidavits and other documents, although "weight will be accorded to the exercise of discretion by the judge below, ... we may draw our own conclusions from the record." Che...