Conway v. Planet Fitness Holdings, LLC
| Decision Date | 26 June 2020 |
| Docket Number | Docket: 1377CV00756-D |
| Parties | JAYNE CONWAY v. PLANET FITNESS HOLDINGS, LLC & OTHERS |
| Court | Massachusetts Superior Court |
Present: /s/Jeffrey T. Karp Associate Justice, Superior Court
County: ESSEX, ss.
Keywords: MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION FOR NEW TRIAL, JUDGMENT NOTWITHSTANDING THE VERDICT, OR RELIEF FROM JUDGMENT (Paper No. 127)
This action arose out of a settlement agreement between plaintiff Jayne Conway ("Conway") and defendants Planet Fitness Holdings, LLC ("Planet Fitness"), Pla-Fit Franchise, LLC ("Pla-Fit"), Michael Grondahl ("Michael"), Marc Grondahl ("Marc"), Christopher Rondeau ("Rondeau"), and Richard Moore ("Moore"), which followed Planet Fitness's termination of Conway from her position as Chief Financial Officer ("CFO") in November 2011.2
In April and May 2019, this Court presided over the trial of this matter before a jury. The jury returned a verdict in favor of Conway.
Motion, the defendants advance several reasons why the Court should grant them a new trial, including that the jury's award of damages is excessive.
As is discussed below, the Court agrees that the jury's award of damages is excessive and that a new trial on damages is warranted. However, the Court disagrees with the defendants that a new trial is otherwise warranted. Consequently, the Motion is ALLOWED in part and DENIED in part.
The parties presented the following relevant evidence at the trial.4
Planet Fitness, a limited liability company, owns and operates health clubs. It also franchises health clubs through its subsidiary, Pla-Fit. Michael, Marc, and Rondeau founded Planet Fitness in the early 1990s and served in various capacities as its officers.5 They also collectively owned a controlling membership interest in Planet Fitness.
In approximately April 2010, after (and during) a period of explosive growth and in contemplation of exploring a public stock offering, Planet Fitness hired Conway, a longtime corporate executive, to serve as its chief financial officer.6 She was the first person to serve in that capacity at Planet Fitness. In connection with her hiring, Conway and Planet Fitness entered into an employment agreement wherein Planet Fitness agreed, inter alia, to grant Conway a membership interest of 1.5% of the full equity value of Planet Fitness in excess of $240,000,000 upon vesting. The parties memorialized their agreement regarding Conway's membership interest in the Planet Fitness Holdings, LLC, Restricted Interest Agreement ("RIA").
In November 2011, Planet Fitness terminated Conway's employment. Conway believed Planet Fitness improperly terminated her and retained counsel to pursue a claim for wrongful termination against it. During the negotiation of the settlement of her wrongful termination claim, Planet Fitness and Conway jointly agreed to retain Delphi Valuation Advisors ("Delphi") to determine the value of Planet Fitness as of the date of Conway's termination and, hence, the value of Conway's membership interest therein.
In November and December 2012, Delphi issued draft and final valuation reports, respectively, to Conway and the defendants. The reports were prepared using information provided to Delphi by Planet Fitness. In the valuation reports, Delphi stated that Planet Fitness management was actively negotiating the sale of Planet Fitness to a private investor and that the valuation of Planet Fitness used in the negotiations was between $315,000,000 and $355,000,000.
In January 2013, relying on, inter alia, Delphi's valuation reports, Conway settled her wrongful termination claim with Planet Fitness by entering into a Separation and Settlement Agreement ("Settlement Agreement").7 The Settlement Agreement required Planet Fitness to pay Conway $500,000 in consideration of her claim to a membership interest in Planet Fitness and the release of her wrongful termination claim.
In approximately April 2013, Conway learned that in mid-December 2012, i.e., prior to the date of Delphi's final valuation report which reported that Planet Fitness was actively negotiating its sale, the sale of a 75% interest in Planet Fitness to a private equity firm, TSG Consumer Partners ("TSG"), had been completed (and was no longer being negotiated). Conway further learned TSG's purchase was based on an equity value of Planet Fitness of approximately $480,000,000. Consequently, Conway believed the defendants committed fraud during the negotiation of the settlement. Thereafter, this litigation ensued.
On October 25, 2018, the Court entered summary judgment in favor of the defendants on Count V (declaratory judgment) of the Complaint (Paper No. 1), and declared that the effective date of the transfer of Conway's membership interest in Planet Fitness to Planet Fitness was March 8, 2012. (See Memorandum of Decision at Paper No. 58).
This Court presided over the trial of this matter before a jury during approximately twelve trial days in April and May 2019. Conway moved for trial on Counts I (fraud), Ill (negligent misrepresentation), and VI (breach of the implied covenant of good faith and fair dealing) of the Complaint. The substantive law of New Hampshire applied to those claims and the Court instructed the jury under New Hampshire law. The jury heard testimony from twelve witnesses and 65 exhibits were admitted for its consideration. (See Exhibit List at Paper No. 114).
On May 3, 2019, the jury, answering special questions, returned a verdict in favor of Conway in the amount of $5,360,000, finding that the defendants committed fraud (Count I of the Complaint) and made negligent misrepresentations (Count III of the Complaint) to induce her to sign the Settlement Agreement. (See Special Verdict Form at Paper No. 113). The jury found in favor of the defendants on Conway's claim for breach of the implied covenant of good faith and fair dealing (Count VI of the Complaint).8
On December 20, 2019, the Court allowed, in part, Plaintiff's Motion To Approve Judgment (Paper No. 117) (insofar it requested judgment of $5,360,000) and denied it in part (insofar as it requested prejudgment interest pursuant to Massachusetts law at G.L. c. 231, § 6B). In sum, the Court ruled that prejudgment interest should be calculated pursuant to New Hampshire law at N.H. Rev. Stat. § 336:1(11), and post-judgment interest should be calculated pursuant to Massachusetts law in the normal course. (See Memorandum of Decision at Paper No. 120). Therefore, the Court entered judgment on Counts I and III of the Complaint for Conway against all remaining defendants in the amount of $5,360,000, plus prejudgment interest of $928,471.11. The Court entered the aforementioned declaratory judgment on Count V and judgment of dismissal on the remaining Counts of the Complaint (i.e., Counts II, IV, VI, VII, and VIII).
In the Motion, the defendants contend that the Court should grant a new trial pursuant to Mass. R. Civ. P. 59(a) for five reasons. First, they object to the amount and basis of the damages awarded by the jury, claiming that the amount awarded is against the weight of the evidence at trial. The defendants request a new trial on damages or remittitur. Second, they argue the Court erred in its instructions to the jury on the fraud claim. Third, the defendants contend the Court erred in admitting evidence regarding Moore's character and that the evidence was highly prejudicial. Fourth, they argue Conway failed to prove that they made a false statement of (or concealed) a material fact and that she justifiably relied on the statement when signing the Agreement. Fifth, the defendants contend Conway's counsel engaged in "prejudicial misconduct" during the trial.
The defendants cite Mass. R. Civ. P. 50(b) and 60 in the title and first paragraph of the Motion, and assert in the first paragraph that they "move for" judgment notwithstanding the verdict ("JNOV"). However, the defendants do not argue anywhere in their submissions that any of the five aforementioned bases for post-trial relief warrant entry of JNOV under Rule 50(b) or relief from the judgment under Rule 60. In the absence of any argument in support of their fleeting requests for JNOV and relief from the judgment, the defendants have waived those claims for relief. Therefore, the Court DENIES so much of the Motion that seeks entry of JNOV and relief from the judgment.
After setting forth the appropriate legal standards at issue, the Court will address each of the defendants' arguments in turn.
"A trial judge should set aside a jury verdict in a civil case [pursuant to Mass. R. Civ. P. 59] only if the judge concludes that 'the verdict is so markedly against the weight of the evidence as to suggest that the jurors allowed themselves to be misled, were swept away by bias or prejudice, or for a combination of reasons, including misunderstanding of applicable law, failed to come to a reasonable conclusion."' Beverly v. Bass River Golf Mgt., Inc., 92 Mass. App. Ct. 595, 602 (2018) (quoting W. Oliver Tripp Co. v. American Hoechst Corp., 34 Mass. App. Ct. 744, 748 (1993)). However, "a judge is not to 'act merely as a 13th juror [to] set [the] verdict aside simply because he would have reached a different result had he been the trier of facts." Fitzpatrick v. Wendy's Old Fashioned Hamburgers of New York, Inc., 96 Mass. App. Ct. 410, 430 (2019), furth. rev. granted, 484 Mass. 1104 (2020) (quoting Clapp v. Haynes, 11 Mass. App. Ct. 895, 896 (1980) (citation omitted)).
As for the defendants' request for remittitur, although the Court may not substitute its judgment of damages for that of the jury, D'Annolfo v. Stoneham Hous. Auth., 375...
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