ADVANCED SYSTEMS CONSULTANTS v. EPM, Civ. A. No. 94-12522-WGY

• Citation: 899 F. Supp. 832
• Decision Date: 22 September 1995
• Docket Number: Civ. A. No. 94-12522-WGY,94-12523-WGY.
• Parties: ADVANCED SYSTEMS CONSULTANTS LIMITED, Plaintiff, v. ENGINEERING PLANNING AND MANAGEMENT, INC., Defendant. ENGINEERING PLANNING AND MANAGEMENT, INC., Plaintiff, v. EA SYSTEMS INC. and William Selden, Defendants.
• Court: U.S. District Court — District of Massachusetts

899 F. Supp. 832

ADVANCED SYSTEMS CONSULTANTS LIMITED, Plaintiff, v. ENGINEERING PLANNING AND MANAGEMENT, INC., Defendant.

ENGINEERING PLANNING AND MANAGEMENT, INC., Plaintiff, v. EA SYSTEMS INC. and William Selden, Defendants.

Civ. A. Nos. 94-12522-WGY, 94-12523-WGY.

United States District Court, D. Massachusetts.

September 22, 1995.

Andrew S. O'Connor, New York City, for plaintiff.

Douglas G. Moxham, Lane & Altman, Boston, MA, Richard C. Heidlage, Heidlage & Reece, Boston, MA, for Engineering Planning Management, Inc., EA Systems Inc.

MEMORANDUM AND ORDER

YOUNG, District Judge.

"No blood, no foul" is one of the most venerable rules of playground basketball. The sole question of general interest that remains in these complex proceedings is whether one who commits a foul, in the form of an unfair or deceptive act in violation of the Massachusetts Consumer Protection Act, Mass.Gen.L. ch. 93A, §§ 2, 11, is liable for the attorneys' fees of an intended victim who so quickly seeks and obtains injunctive relief that no actual blood is drawn in the form of monetary or economic damages. Despite the numerous similarities between the playground and the business world, see generally Robert Fulghum, All I Ever Really Needed to Know I Learned in Kindergarten (1988), upon careful reflection, the "no blood, no foul" rule does not apply in the Chapter 93A context; i.e., the target of an unfair or deceptive act or practice who incurs legal expenses in obtaining and defending injunctive relief to safeguard itself against economic loss is entitled to invoke the attorneys' fees provision of Chapter 93A.

This is a factually complex case with various post-trial motions pending. The Court limits itself here to the facts pertinent to the discrete issue noted above.

Advanced Systems Consultants Limited ("Advanced"), a British corporation, entered into an agency agreement with Engineering Planning and Management, Inc. ("EPM") on March 4, 1991, under which EPM agreed to market and license certain software on behalf of Advanced. Advanced had developed and owned the rights to the software, known as PHOENIX, a database management system used in the design, engineering, and construction of power plants and other industrial facilities. During the life of the agreement, an employee of EPM, William Selden ("Selden"), left EPM and went to work for one of its competitors, EA Systems Inc. ("EAS"). EAS then acquired Advanced.

Numerous disputes arose among the parties regarding the agency agreement, the use of PHOENIX, and Selden's conduct. After a nonjury trial limited to questions of liability, the Court found and ruled that Selden and EAS had engaged in a scheme whereby Selden would "jump ship" from EPM and use the confidential knowledge and data he had obtained there, in violation of his confidentiality agreement with EPM, to further the interests of his new employer, EAS, for the purpose of crowding EPM out of its market and replacing it with EAS. Such conduct, standing alone, violates Chapter 93A. Advanced became part of the scheme following its acquisition by EAS, and is thus likewise subject to liability.

On May 15, 1995, the Court issued an injunction prohibiting Selden from taking certain actions with respect to PHOENIX and EPM's customers. During the trial on damages in July of 1995, the Court found that EPM had suffered no monetary damages as a result of Selden's conduct, as EPM had nipped the scheme in the bud and prevented its coming to fruition. The Court further explained that it had granted the injunction "to protect EPM against the wrongful use by William Selden of EPM's internal proprietary data." In other words, had EPM not taken action, there is little doubt but that it would have suffered extensive damages as a result of the unfair or deceptive acts of Selden, EAS, and Advanced.

The Court ruled EPM was entitled to attorneys' fees in the amount of $150,000 as a result of the defendants' violation of Chapter 93A and the consequent need for EPM to seek injunctive relief and defend it throughout the proceedings. EAS and Selden moved for reconsideration of this decision, arguing that, as matter of law, an award of attorneys' fees is improper absent actual monetary or economic damage.

Pursuant to Section 11 of Chapter 93A:

If the court finds in any action ... that there has been a violation of section two, the petitioner shall, in addition to other relief provided for by this section and irrespective of the amount in controversy, be awarded reasonable attorneys' fees and costs incurred in said action.

Mass.Gen.Laws Ann. ch. 93A, § 11 (West 1984 & Supp.1995) (emphasis supplied). Section two, in turn, proscribes "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Id. § 2. A person who has not yet suffered any loss of money or property as a result of a violation of section two:

may obtain ... an injunction if it can be shown that the aforementioned unfair method of competition, act or practice may have the effect of causing such loss of money or property.

Id. § 11. The language of the statute therefore mandates the award of attorneys' fees when a plaintiff has proven a violation of section two and is entitled to—though does not necessarily obtain—some form of monetary, injunctive, or other relief. See Jet Line Servs., Inc. v. American Employers Ins. Co., 404 Mass. 706, 718, 537 N.E.2d 107 (1989); Jillian's Billiard Club of Amer., Inc. v. Beloff Billiards, Inc., 35 Mass.App.Ct. 372, 377, 619 N.E.2d 635, rev. denied, 416 Mass. 1108, 625 N.E.2d 1369 (1993) (plaintiff also obtained injunction); Stone v. W.E. Aubuchon Co., 29 Mass.App.Ct. 523, 525-26, 529, 562 N.E.2d 852 (1990) (dicta) ($500 attorney fee award improper despite 93A violation where all other claims disposed of without relief); cf. Rex Lumber Co. v. Acton Block Co., 29 Mass.App.Ct. 510, 520, 562 N.E.2d 845 (1990) (where trial court ordered relief in the form of specific performance of agreement to convey property, losing party did not argue that absence of entitlement to money damages precluded award of attorneys' fees under 93A).

Selden and EAS seek to avoid this result by asserting that attorneys' fees are recoverable only if the plaintiff can demonstrate that it has already suffered an actual loss. In support of this proposition, they cite Martha's Vineyard Auto Village, Inc. v. Newman, 30 Mass.App.Ct. 363, 569 N.E.2d 401, rev. denied, 409 Mass. 1105, 571 N.E.2d 28 (1991). That case involved a lengthy dispute between car dealers, one of whom was found to have violated Chapter 93A. The Superior Court awarded attorneys' fees and costs—but no other relief—despite the absence of any damage to the plaintiff arising out of the 93A...