Sensitech, Inc. v. Limestone FZE
| Decision Date | 26 January 2022 |
| Docket Number | Civil Action No. 20-11043-NMG |
| Parties | SENSITECH, INC., Plaintiff, v. LIMESTONE FZE, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Shepard Davidson, Gregory S. Paonessa, Burns & Levinson LLP, Boston, MA, for Plaintiff.
Lee C. Bromberg, James J. Thomson, McCarter & English, LLP, Boston, MA, Alexander L. Ried, McCarter & English, LLP, Stamford, CT, for Defendant.
This action arises from the alleged breach by LimeStone FZE ("LimeStone" or "defendant") of a distribution contract between it and plaintiff Sensitech, Inc. ("Sensitech" or "plaintiff").
Pending before the Court are 1) plaintiff's motion for the Court to reconsider its dismissal of claims against erstwhile defendant Samer Alwash ("Alwash" and together with LimeStone "defendants"), the managing director of LimeStone (Docket No. 91) and 2) defendant's motion to file an amended answer and counterclaims (Docket No. 93). Also pending are Sensitech's motion for legal fees (Docket No. 96) and LimeStone's motion for leave to file a reply (Docket No. 97).
For the reasons set forth below, LimeStone's motion to amend its answer and counterclaims will be allowed, in part, and denied, in part. The other pending motions will be denied.
The Court has previously set forth the factual and procedural background of this action at length. See Docket No. 84 at 1-6. For purposes of the present motions, the relevant facts are as follows.
Sensitech is a Delaware corporation with its principal place of business in Massachusetts. It manufactures and sells products and services which monitor the quality, integrity and security of cargo in transit. LimeStone is a company based in Dubai and was the distributor of LimeStone's products throughout the United Arab Emirates ("the UAE") and Saudi Arabia from 2015 to 2018. As detailed in the Court's prior memorandum and order, the parties’ business relationship deteriorated and, in June, 2020, Sensitech commenced the present litigation against LimeStone and Alwash in the Massachusetts Superior Court for Essex County for damages and injunctive relief. See id.
Defendants timely removed the case to this Court. Thereafter, Alwash moved to dismiss the claims against him for lack of personal jurisdiction. LimeStone answered the complaint and, joined by Alwash (who maintained his jurisdictional objection), asserted 12 counterclaims against Sensitech. Sensitech moved to dismiss those counterclaims pursuant to Fed. R. Civ. P. 12(b)(6). In July, 2021, the Court dismissed the claims against Alwash in his individual capacity for lack of personal jurisdiction, and most of LimeStone's counterclaims.
Sensitech now moves for reconsideration of the dismissal of the claims against Alwash or, in the alternative, for leave to take jurisdictional discovery. LimeStone moves for leave to file an amended answer in order to provide additional factual support for some of the dismissed counterclaims.
Sensitech has moved for the Court to reconsider the dismissal of its claims against Alwash or, in the alternative, to allow it to take jurisdictional discovery. It contends that because Alwash is the managing director, owner and sole decision-maker for LimeStone he is, "as a practical matter", LimeStone and therefore is bound individually by the forum selection clause in the distribution agreement. For the reasons stated in its prior memorandum and order dismissing Sensitech's claims against Alwash, the Court does not possess personal jurisdiction over Alwash and declines to reconsider its ruling.
For substantially the same reasons, the Court will not permit Sensitech to take jurisdictional discovery. The Court possesses broad discretion to permit jurisdictional discovery, see Me. Med. Ctr. v. United States, 675 F.3d 110, 118-19 (1st Cir. 2012), and a plaintiff may be entitled to such discovery where it has made a "colorable claim" of jurisdiction and has been "diligent in preserving [its] rights", see United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 625-27 (1st Cir. 2001). Diligence requires, inter alia, that the plaintiff "present facts to the court which show why jurisdiction would be found if discovery were permitted". Id. at 626. Sensitech has made no such presentation nor is there a colorable claim that the Court possesses jurisdiction with respect to Alwash. Accordingly, its request for jurisdictional discovery will be denied.
LimeStone has moved for leave to amend its complaint to allege additional facts in support of five counterclaims dismissed by the Court. Those counterclaims are: Count III (tortious interference with contractual relations), Count IV (tortious interference with business relations), Count VIII (violation of the Massachusetts trade secrets act, M.G.L. c. 93, § 42A ), Count IX (common law misappropriation) and Count X (violation of the Defend Trade Secrets Act ("the DTSA"), 18 U.S.C. § 1836 ).1
Sensitech opposes the motion on the grounds that no relief can issue on the amended counterclaims which are therefore futile. It also asserts the motions should be denied because LimeStone failed to meet and confer with Sensitech in a good faith effort to narrow or resolve the issues raised by the motion before filing as required by Rule 7.1 of the local rules of the district court.
A party may amend his pleading by leave of the court, which should be "freely give[n] ... when justice so requires". Fed. R. Civ. P. 15(a)(1), Holbrook v. Boston Scientific Corp., 487 F.Supp.3d 100, 104 (D. Mass. 2020). Rule 15(a) gives courts wide discretion in deciding whether to allow or deny leave to amend. U.S. ex rel. Gagne v. City of Worcester, 565 F.3d 40, 48 (1st Cir. 2009). A court acts within that discretion if it denies leave for reasons of, inter alia, undue delay in filing the motion, repeated failure to cure deficiencies, undue prejudice to the opposing party or futility of amendment. Id.
A proposed amendment is futile if it "does not plead enough to make out a plausible claim for relief". HSBC Realty Credit Corp. v. O'Neill, 745 F.3d 564, 578 (1st Cir. 2014). Futility thus applies "the same standard of legal sufficiency as applies to a Rule 12(b)(6) motion." Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996). To survive such a motion, a complaint must contain "sufficient factual matter" to state a claim for relief that is actionable as a matter of law and "plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 667, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).
A claim is facially plausible if, after accepting as true all non-conclusory factual allegations, the court can draw the reasonable inference that the opposing party is liable for the misconduct alleged. Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st Cir. 2011). A court may not disregard properly pled factual allegations even if actual proof of those facts is improbable. Id. Rather, the relevant inquiry focuses on the reasonableness of the inference of liability that the movant is asking the court to draw. Id. at 13. When rendering that determination, a court may not look beyond the facts alleged in the counterclaim, documents incorporated by reference therein and facts susceptible to judicial notice. Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011).
The counterclaims which LimeStone seeks to amend fall into two categories: 1) those which concern alleged tortious interference with contractual and business relations and 2) those which concern alleged misappropriation of trade secrets in violation of federal, state and common law proscriptions. The Court considers them seriatim.
The proposed amended counter-complaint alleges that Sensitech tortiously interfered with LimeStone's contractual and business relations. It alleges that, in 2018, Sensitech blocked LimeStone's alleges and ceased communication in retaliation for concerns that LimeStone had raised about the quality of certain Sensitech monitors which prevented LimeStone from fulfilling orders from its customers. It further alleges that Sensitech employed other distributors to fill those orders, in violation of its exclusive distributorship and, in addition, began selling to some of those customers directly.
Psy-Ed Corp. v. Klein, 459 Mass. 697, 947 N.E.2d 520, 536 (2011), see also Hamann v. Carpenter, 937 F.3d 86, 93 (1st Cir. 2019). A party cannot "tortiously interfere" with a contract or business relationship to which he is a party. Psy-Ed Corp., 947 N.E.2d at 537.
The proposed amended complaint fails to state a claim of tortious interference with contractual relations. Although LimeStone alleges that Sensitech caused it to lose customers (in fact, its entire customer base), LimeStone does not assert that any of them breached their contract, let alone that Sensitech induced them to do so. See id. at 536 (). Because the amended counterclaim fails to allege facts sufficient to support a claim of tortious interference with contractual relations (Count III), it is futile. See Lemelson v. United States Bank Nat'l Ass'n, 721 F.3d 18, 21 (...
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