Bruno Int'l Ltd. v. Vicor Corp.
| Decision Date | 16 September 2015 |
| Docket Number | CIVIL ACTION NO. 14-10037-DPW |
| Parties | BRUNO INTERNATIONAL LTD., Plaintiff, v. VICOR CORPORATION, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
The plaintiff, Bruno International Ltd. ("Bruno") brings this action against Vicor Corporation ("Vicor") alleging a variety of claims of wrongdoing in connection with a contractual and business relationship that soured. Vicor has moved to dismiss all counts of the Complaint against it for failure to state a claim upon which relief can be granted. At a hearing on these motions, I directed the parties to proceed with discovery on the assumption that at least some portion of the plaintiff's interrelated claims would survive. I now grant Vicor's motion to dismiss as to all but portions of Count I and Count II.
I recite the facts as alleged in the Complaint and as set out in certain documents fairly incorporated therein. Beddallv. State Street Bank & Trust Co., 137 F.3d 12, 17 (1st Cir. 1998).
Bruno is an Israeli corporation that sells power products, components, and systems, and provides design, engineering, and technical services, to electronic industry manufacturers in Israel. Compl. ¶ 8. For nearly twenty-five years, Bruno served as the exclusive distributor and representative in Israel for Vicor, a Massachusetts-based and Delaware-incorporated company that manufactures, sells, and supplies modular power components, complete power systems, and customer power solutions globally. Id. ¶¶ 1, 9. During the course of this representation, Bruno invested heavily in the Israeli market and created an extensive base of corporate customers. Id. ¶¶ 1, 12. These efforts were recognized by Vicor through awards, bonuses, and other commendations. Id. ¶¶ 13, 19.
On May 19, 2009, Vicor notified Bruno by email that their exclusive distribution arrangement would not be renewed. Id. ¶ 14. Instead, in mid-June, Bruno and Vicor signed a Representation and Distribution Agreement (the "Agreement"), effective June 1, 2009. Id. ¶ 14; Doc. 10 (Agrmt.). The Agreement permitted Vicor to "appoint non-exclusive representatives" in Israel and required it "to promote the name of Representatives jointly in any international advertising or promotional material wherever this is practicable[,] and todistribute sales leads and qualified inquiries to each Representative." Compl. ¶ 13(c); Agrmt. pg. 1. The Agreement required Bruno, as a representative, to "use it's [sic] best efforts to promote the sale of [Vicor's] Products" throughout Israel, to "furnish [Vicor] with copies of relevant customer quotations and correspondence," to "submit Point of Sale reports and forecasts on a regular basis," and to "take all reasonable precautions to ensure that confidential information received from [Vicor] . . . will not be divulged to any person outside its own organization." Agrmt. ¶¶ 15, 18(a)-(d). Under the terms of the Agreement, Bruno could represent another manufacturer of similar but not directly competing products in Israel, with some restrictions. Id. ¶ 1. The Agreement also provided for termination without cause with ninety-days notice by either party, or termination for cause with thirty-days notice. Id. ¶¶ 24A, 24B.
After the execution of the Agreement, Vicor informed Bruno that it would be introducing a second distributor in Israel in 2010. Compl. ¶ 15. Bruno expressed concern to Vicor that a new distributor would benefit from Bruno's development of the Vicor brand name in Israel. Id. ¶¶ 16, 17. Meanwhile, over the course of 2010, Bruno increased its own sales in Israel. Id. ¶¶ 16, 17. Nonetheless, in January 2011, Vicor appointed MigvanTechnologies & Engineering, Ltd. ("Migvan") as a second distributor. Id. ¶ 17.
Bruno alleges that from this point forward, Vicor strongly favored Migvan and facilitated Migvan's replacement of Bruno as the leading distributor of Vicor products in Israel. Id. ¶¶ 18, 31. This is said to have taken several forms.
First, Bruno alleges that Vicor encouraged Migvan to recruit salespeople from Bruno knowing that such transfers would harm Bruno's sales, and that Migvan successfully recruited one of Bruno's senior sales engineers. Id. ¶¶ 20, 31. That engineer then won a 2011 Vicor distributor award on behalf of Migvan. Id. ¶¶ 20, 31.
Second, Bruno alleges that Vicor supported Migvan in actively communicating with existing Bruno customers and making certain representations to obtain their business. Compl. ¶¶ 2-6, 22-23, 25-26, 29-31. For example, at meetings arranged by Bruno at Vicor's request with existing Bruno customers, Vicor recommended purchasing Vicor products from Migvan rather than Bruno because Migvan could offer better pricing. Id. ¶¶ 25-26. Migvan further represented to one Bruno customer, Commtact Ltd. ("Commtact"), that it was the exclusive supplier of Vicor products for that customer. Id. ¶ 23. In addition, Bruno alleges that Vicor refused to accept Bruno's registration of a new project on behalf of its existing customer, Elbit Systems,Ltd. ("Elbit"), and instead awarded the sale to Migvan. Id. ¶ 22.
Bruno alleges that much of Migvan's undercutting of Bruno's pricing stems from Vicor's use and sharing of pricing information provided by Bruno to Vicor under a confidentiality understanding. In January 2012, Vicor requested "sensitive and confidential customer pricing information" from Bruno. Id. ¶ 27. Bruno provided the requested information, which included "information relating to pricing, sales, engineering and design and customer lists developed by Bruno" by email in March 2012, with the explicit request and understanding that "Vicor would maintain the confidentiality of Bruno's proprietary information." Id. ¶¶ 28, 47; March 2012 Email. A member of Vicor's senior management replied: "please be assured I will keep it confidential." Compl. ¶ 28; March 2012 Email. However, Bruno alleges that Vicor shared all or part of this confidential information with Migvan to enable it to undercut Bruno's pricing with its existing customers and outbid Bruno for new projects. Compl. ¶¶ 29, 49, 50. In addition, Bruno alleges that Vicor shared the cost price paid by Bruno for Vicor products with one of Bruno's customers, Elta Systems, Ltd. ("Elta") and informed Elta that it would receive better pricing from Migvan. Id. ¶ 30. Migvan subsequently submitted bids on new projects for Elta with lower prices than those submitted by Bruno andthereafter replaced Bruno as the Vicor distributor for Elta. Id.
Bruno alleges that, in addition to Vicor's facilitation of Migvan's sales, Vicor took other steps that negatively impacted Bruno's sales. First, following additional meetings between Vicor and Bruno customers arranged by Bruno at Vicor's request, Vicor began to sell a particular product directly to one of Bruno's customers, Alma Lasers, Ltd. ("Alma"). Id. ¶ 38. This product was "a semi-customized power unit that used Vicor products and was devised by and proprietary to Bruno" and that had been sold by Bruno to Alma in the past. Id. Vicor did not pay Bruno a commission for these sales. Id.
Second, in April 2012, Bruno purportedly learned that it would not be permitted to sell Vicor's newer, more advanced product lines (VI-Chip and Picor), but only the "older and less desirable line of products (Brick)," even though Vicor's future business was based on the sale of the newer lines. Id. ¶ 32. Bruno informed Vicor that this "sudden and unilateral decision" would prevent Bruno "from offering its Israeli customers a complete power solution for new products" and inhibit future sales by Bruno. Id. ¶ 33. Bruno also reminded Vicor that in 2011, it had registered 25 projects with Israeli customers for VI-Chip and Picor products, demonstrating that it was committed to selling these product lines. Id. ¶ 34.
In June 2012, Bruno's senior management met with Vicor representatives at the Vicor headquarters to express their concern, apparently to no avail. Id. ¶ 36. In October, Vicor notified Bruno by email of its intention to terminate the parties' Agreement effective February 1, 2013. Id. ¶ 39. The termination letter indicated that the termination was due in part to a "dramatic reduction in new business generation activity from Bruno." Id. Bruno alleges that this termination was motivated by Vicor's preference for Migvan as the Israeli distributor, and that the reduction was the result of Vicor's own efforts to replace Bruno with Migvan. Id.
As a result of this alleged conduct by Vicor, Bruno filed this action in January 2014 alleging breach of the implied covenant of good faith and fair dealing (Count I), misappropriation of confidential information (Count II), tortious interference with contractual relationships (Count III), tortious interference with advantageous business relationships (Count IV), and violation of the Massachusetts consumer protection statute, Mass. Gen. Laws ch. 93A, §§ 1, 11 (Count V). Compl. ¶¶ 42-69. Bruno contends that Vicor's wrongful conduct over the course of the five-year period governed by the Agreement caused Bruno to suffer lost profits and other compensatory and consequential damages. Id. ¶¶ 45, 52, 56, 61, 68.
Vicor has moved to dismiss all counts of the Complaint, Dkt. No. 8. For its part, Vicor contends that it complied with the terms of the Agreement governing its relationship with Bruno, and that it merely engaged in reasonable business decision-making regarding the Israeli market for its products and who should service it.
To survive a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation omitted). "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not 'show[n]' - 'that the...
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