SONICSOLUTIONS ALGAE CONTROL LLC SONIC SOLUTIONS LLC ALGAECONTROL US LLC v. DIVERSIFIED POWER INTERNATIONAL LLC ANTONIO TRIGIANI HYDRO BIOSCIENCE LLC (2024)

MEMORANDUM AND ORDER REGARDING CROSS MOTIONS FOR SUMMARY JUDGMENT AND DEFENDANTS’ MOTION IN LIMINE (Dkt. Nos. 161, 164, 165, 171, and 176)

I. INTRODUCTION

After years of cooperation, the business relationship between Plaintiffs SonicSolutions Algae Control, LLC (“SSAC”), Sonic Solutions, LLC (“Sonic Solutions”), and Algaecontrol.US LLC (“ACUS”) and Defendants Diversified Power International, LLC (“DPI”), Antonio Trigiani (“Trigiani”), and Hydro Bioscience, LLC (“HBS”) collapsed. In the aftermath, Plaintiffs, relying on this court's diversity jurisdiction, initiated this action alleging tortious interference with advantageous business relationships (Count I), tortious interference with contract (Count II), intentional interference with contract (Count III), violation of Mass. Gen. L. ch. 93A, § 11 (Count IV), breach of contract (Count V), breach of non-compete agreement (Count VI), defamation (Count VII), and cancellation of trademarks pursuant to 15 U.S.C. § 1119 (Count VIII).

Defendants responded, bringing counterclaims for declaratory judgment (Counterclaim I), tortious interference with business relations (Counterclaim II), tortious interference with contract (Counterclaim III), fraudulent concealment (Counterclaim IV), aiding and abetting breach of fiduciary duty (Counterclaim V), trademark infringement (Counterclaim VI), unfair business practices (Counterclaim VII), and civil conspiracy (Counterclaim VIII).

The parties filed cross-motions for summary judgment. In support of their motions, Defendants raise three arguments.¹ As a threshold matter, they contend Sonic Solutions and ACUS lack standing to bring any claims. In addition, Defendants assert Trigiani and HBS are immune from liability by operation of law. Specifically, they claim Trigiani is protected by the corporate veil and HBS is not a successor or alter ego of DPI. Lastly, Defendants argue Plaintiffs failed to raise triable issues of fact regarding any of their substantive claims. For their part, Plaintiffs argue Defendants failed to demonstrate triable issues of fact regarding Counterclaims II-VIII.

For the following reasons, Defendants’ motions are granted with respect to Sonic Solutions and ACUS for lack of standing, except for Count VI as to Sonic Solutions. Defendants’ motions are granted in part and denied in part on the merits. Specifically, Defendants’ motions are granted as to Counts IV, VI, and VIII, but denied as to Counts I-III, V, and VII. Lastly, the court grants SSAC's motion in its entirety, dismissing Counterclaims II-VIII.

II. FACTUAL BACKGROUND

The court construes the facts in the light most favorable to the non-moving party, but ignores conclusory allegations, improbable inferences, and unsupported speculation in doing so. Prescott v. Higgins, 538 F.3d 32, 39–40 (1st Cir. 2008).²

A. The Parties

All parties were involved in designing, manufacturing, marketing, and selling ultrasound algae remediation devices. Sonic Solutions began selling these devices in 2002. ACUS was initially involved in distributing Sonic Solutions’ product, before shifting to competing against Sonic Solutions. In 2019, seeking to avoid competition, Sonic Solutions and ACUS collaborated in creating a new entity, SSAC. Sonic Solutions and ACUS were fifty-fifty “members” of the new limited liability company. Unlike Sonic Solutions, ACUS, and SSAC, who operated primarily by marketing and selling algae remediation products made by others, Defendant DPI's Hydro BioScience Division manufactured its own products. Defendant Trigiani was, and is, the sole member of DPI. In 2021, the Hydro BioScience Division spun off from DPI, forming Defendant HBS. Trigiani remained the sole member of both DPI and HBS.

B. Undisputed Facts Relevant to Defendants’ Motions

1. The Confidentiality Agreements

In 2012, Sonic Solutions sought to purchase algae remediation devices from DPI. (Dkt. No. 208, ¶ 21). To facilitate the relationship, the parties executed a “CONFIDENTIALITY, NON-DISCLOSURE ND [sic] NON-COMPETE AGREEMENT” (the “2012 agreement”). (Id. ¶¶ 22-25; see also Dkt. No. 98-1, Pls.’ First Amended Compl. (“FAC”), Ex. 1 at 2-3). According to the 2012 agreement, Sonic Solutions and DPI would “maintain and keep as confidential all information received from the other and not ․ use such information to compete directly or indirectly with the other but only in connection with the evaluation of a possible arrangement, subject to the following limitations.” (Dkt. No. 98-1, FAC, Ex. 1 at 2).³ The 2012 agreement's intent was facilitating the parties’ exploration of a vendor-buyer business relationship, (Dkt. No. 208, ¶ 26), which did not come to fruition in 2012, (Id. ¶ 30). Later, in 2016, DPI developed a new ultrasound remediation product, (Id. ¶ 42), which Sonic Solutions marketed and sold. (Id. ¶¶ 50-51). In furtherance of this sales relationship, Sonic Solutions and DPI concluded a second “Mutual Disclosure Of Information – CONFIDETIALITY AGREEMENT” (the “2017 agreement”). (Dkt. No. 171-1 at 23; see also Dkt. No. 208, ¶¶ 43-49). Unlike the 2012 agreement, the 2017 agreement did not include a non-competition clause, but it did contain an integration clause indicating it was the final written agreement between the parties. (Dkt. No. 171-1 at 23).

2. The Sales Relationship

Before 2019, ACUS and Sonic Solutions separately bought DPI product using purchase orders.⁴ (Dkt. No. 208, ¶¶ 53-54, 78). In May of 2019, seeking to streamline the process, ACUS and Sonic Solutions created SSAC. (Id. ¶¶ 99-100). DPI was aware of SSAC's creation. (Id. ¶ 101). Immediately after creation, SSAC and DPI entered a business relationship. (Id. ¶ 103). Despite this ongoing course of dealing, SSAC and DPI did not have a written agreement memorializing any of the relationship's terms. (Id. ¶ 102).

From 2019 to 2020, the parties enjoyed an amicable business relationship. Even without a written exclusive distributorship agreement, (id.), DPI promised to funnel SSAC distributorship opportunities in the wastewater, parks and recreation, waterways, and large-scale environmental products submarkets. (Dkt. No. 207-21 at 2). DPI further told SSAC it would not interfere with existing customer relationships. (Id.). In contrast, SSAC had no obligation to buy certain amounts of DPI product at specific price points, (Dkt. No. 208, ¶¶ 115-117), nor did the parties have any written termination procedures, (id. ¶ 107). But DPI employees all testified regarding an unwritten policy benefitting SSAC through the channeling of sales opportunities in certain submarkets. (Dkt. No. 207-40, Trigiani Dep., 68:19-71:13; see also Dkt. No. 207-23, Bourbon Dep., 80:18-81:23, 82:4-19). In addition, DPI employees sent emails referencing SSAC as a “distributor[ ]” for pricing purposes, (Dkt. No. 207-37 at 5), while SSAC corporate executives referred to an understanding by all parties that an exclusive dealership agreement existed, (see, e.g., Dkt. No. 208, ¶¶ 108-111).

In January 2020, DPI sought to renegotiate its pricing relationship with SSAC. (Id. ¶ 123). During this negotiation, Trigiani emailed SSAC employees disavowing the existence of an exclusive distributorship relationship with DPI and urging them to refrain from implying otherwise. (Id. ¶¶ 124-125). In response to this email, the parties briefly ended their business relationship, (id. ¶¶ 127-128), before reconciling and renewing the relationship in late January or early February 2020, (id. ¶¶ 129-131).

3. The Relationship Sours

The end of the DPI-SSAC relationship began in the summer of 2020. At that time, a non-party investor, Lawrence Field (“Field”), appeared on the scene. (Id. ¶ 146). Field wanted to purchase the assets of both DPI's HBS Division and SSAC. (Id. ¶¶ 146, 151). DPI and SSAC signed Letters of Intent with Field's company Algaesonix, LLC (“Algaesonix”). (Id. ¶¶ 149, 152). The parties disagree whether DPI and SSAC were mutually aware of the others’ impending sale to Algaesonix, but for purposes of this dispute it is immaterial. Importantly, however, the looming deal between Algaesonix and DPI fell apart in March of 2021. (Id. ¶ 156). Following this collapse, DPI was convinced Algaesonix sought to take over its business by poaching its employees, stealing its intellectual property, and contacting its customers. (Id. ¶¶ 163, 172, 179-184).⁵ In fact, DPI sued its former employees in Tennessee state court relying on this theory. (Id. ¶ 172).

The contentious fallout from DPI and Algaesonix's unconsummated deal ruined SSAC and DPIs’ business relationship. On March 4, 2021, Algaesonix submitted a purchase order to DPI for HBS Division products. (Id. ¶ 157). Algaesonix then planned to sell the equipment to SSAC. (Id. ¶ 158). On April 16, 2021, Trigiani received an email from an SSAC employee causing him to suspect SSAC and Algaesonix merged and leading him to question the intent underlying the most recent Algaesonix purchase order. (Id. ¶¶ 170-171). Trigiani viewed this perceived merger as a threat to his business. (Dkt. No. 211, ¶ 62). Therefore, sometime between April 19 and 26, he decided to end the SSAC-DPI sales relationship. (Dkt. No. 208, ¶ 173). SSAC received Trigiani's letter terminating the relationship on April 26, 2021. (Id. ¶ 174).

4. The Sales Notice

On the same day he terminated the parties’ relationship, Trigiani signed and sent SSAC's customers a memo/document titled “HYDRO BIOSCIENCE OWNERSHIP, DISTRIBUTION AND SALES CLARIFICATION NOTICE.” (Dkt. No. 211, ¶ 65). This notice read, in relevant part:

It has come to our attention that the sales, distribution and ownership of DPI's Hydro Bioscience® product line may have been misrepresented in the relevant marketplace, and we are taking measures to correct these misrepresentations. If you believe you have signed an agreement with, or led to believe that such DPI products are only available from a certain vendor, then please be advised that:

DPI does not currently, nor has it ever had an exclusivity agreement of any form, or sales or distribution agreement with any party or vendor, outside of Norway, Iceland, Scotland and the Faeroe Islands.

This notice is for purposes of clarification that DPI is the owner of its HBS products, DPI's sales channels, and customer support and that no other person has a right thereto or an in interest therein. DPI is also not bound by any exclusivity arrangement in North America, South America, Africa, Australia or Asia. If you have been provided with contrary information, DPI would appreciate if your [sic] contact us and let us know.

(Dkt. No. 98-9, FAC, Ex. 9) (emphasis in original). Additionally, the notice reminded customers that DPI maintained trademarks applying to the HBS product line. (Id.). Among the referenced trademarks were two registered with the United States Patent and Trademark Office (“USPTO”)— Registration No. 5,076,578 (“HYDRO BIOSCIENCE”) and Registration No. 5,080,549 (“QUATTRO-DB”). (Dkt. No. 171-1 at 120, 126).⁶ Shortly after the original notice, Trigiani sent several follow up emails to SSAC customers explaining SSAC was the entity misrepresenting its position in the relevant market. (Dkt. 207-29 at 3-4). Upon receiving Trigiani's notice, at least one SSAC customer responded by agreeing to work directly with DPI going forward. (Dkt. No. 207-60).

5. Creation of HBS

Plaintiffs commenced this action on June 9, 2021 seeking a temporary restraining order and preliminary injunction preventing DPI from using SSAC's confidential information to lure customers. (Dkt. No. 1). On August 17, days before the preliminary injunction hearing, Trigiani registered HBS as a Tennessee limited liability company. (Dkt. No. 174-1 at 51).⁷ According to DPI, HBS was created to better facilitate the sale of its algae remediation products. (Dkt. No. 206, ¶ 15). Trigiani was, and is, the sole member of both HBS and DPI. (Dkt. No. 211, ¶ 3). HBS did not move to a new address or open a separate office. (Dkt. No. 105, ¶¶ 5-6). DPI and HBS also co-mingled employees. (Dkt. No. 206, ¶ 21; see also Dkt. No. 205-11; Dkt. No 205-12 at 2). HBS did not purchase any assets of DPI yet was able to market and sell DPI products and freely use DPI intellectual property. (Dkt. No. 206, ¶¶ 14, 18). On March 31, 2022, Plaintiffs amended their complaint to include HBS. (Dkt. No. 98).

C. Undisputed Facts Relevant to Plaintiffs’ Motion

Defendants’ counterclaims arise primarily out of the activities of a non-party former DPI employee—Charles Morgan (“Morgan”). (Dkt. No. 204, ¶ 1). Morgan's job title was described as “RMA assistant,” “RMA support,” “technical director and HBS supervisor,” “Technical Director,” and “General Manager and Chief Technical Advisor.” (Id. ¶ 6). All parties agree he was subject to a DPI employment agreement. (Id. ¶ 2). This agreement was stored in Morgan's employment file, kept in the office of Trigiani's wife. (Id. ¶ 3). However, DPI employees could not view their personnel files. (Id. ¶ 4). DPI's contact at SSAC, Devon Assael, was unaware of Morgan's employment contract. (Id. ¶ 5).

In the fall of 2020, Morgan worked with SSAC on tendering a bid for supplying the Uruguayan government with algae remediation devices. (Dkt. No. 204, ¶¶ 7-8, 18-19). According to DPI, Morgan misrepresented his employment title during negotiation of the tender. (Id. ¶ 22). He also failed to apprise Trigiani of the status of negotiations, (id. ¶ 23), sent Uruguayan authorities a letter misstating DPI's relationship with SSAC, (id. ¶ 24), and contacted another potential bidder warning them not to submit a tender because DPI was backing SSAC's exclusive bid, (id. ¶ 39). DPI asserts Morgan lacked authority to engage in any of these activities. Shortly after the failure of the Uruguay tender, in the spring of 2021, Morgan left DPI to join non-party Algaesonix. (Dkt. No. 203, ¶ 24).

III. SUMMARY JUDGMENT STANDARD

When ruling on a motion for summary judgment, the court must construe the facts in the light most favorable to the non-moving party. Benoit v. Tech. Mfg. Corp., 331 F.3d 166, 173 (1st Cir. 2003). Summary judgment is appropriate when “there is no genuine dispute as to any material fact” and the moving party “is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). An issue is “genuine” when the evidence is such that a reasonable factfinder could resolve the point in favor of the non-moving party, and a fact is “material” when it might affect the outcome of the suit under the applicable law. Morris v. Gov't Dev. Bank, 27 F.3d 746, 748 (1st Cir. 1994). The nonmoving party bears the burden of placing at least one material fact into dispute after the moving party shows the absence of any disputed material fact. Mendes v. Medtronic, Inc., 18 F.3d 13, 15 (1st Cir. 1994). The non-moving party “can forestall summary judgment by presenting definite, competent evidence demonstrating the existence of a genuine dispute about a material fact.” Murray v. Kindred Nursing Centers West LLC, 789 F.3d 20, 25 (1st Cir. 2015). However, “[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Id. When cross-motions are before the court, “the standard does not change; ․ each motion [is reviewed] separately and [the court] draw[s] all reasonable inferences in favor of the respective non-moving party.” Dahua Tech. USA Inc. v. Feng Zhang, 988 F.3d 531, 537 (1st Cir. 2021).

IV. CHOICE OF LAW

“A federal district court exercising its diversity jurisdiction must apply the choice-of-law rules of the state in which it sits.” Viscito v. Nat'l Plan. Corp., 34 F.4th 78, 83 (1st Cir. 2022) (internal citation omitted); see also Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941). However, “[t]he first step in a choice of law analysis is to determine whether an actual conflict exists between the substantive laws of the interested jurisdictions.” Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir. 2004). When the result is the same under the substantive law of any interested jurisdiction, the court “need not resolve the issue.” Lambert v. Kysar, 983 F.2d 1110, 1114 (1st Cir. 1993). Relatedly, the court is “free to honor the reasonable understanding of the parties as to choice of law.” Katz v. Pershing, LLC, 672 F.3d 64, 72 (1st Cir. 2012); see also Artuso v. Vertex Pharms., Inc., 637 F.3d 1, 5 (1st Cir. 2011).

This dispute implicates Tennessee and Massachusetts law. The parties largely agree on the law governing each issue. See, e.g., Auctus Fund, LLC v. Drone Guarder, Inc., 662 F. Supp. 3d 28, 36 (D. Mass. 2023) (adhering to Massachusetts law when neither parties’ briefs implied an intention otherwise); SJ Abstract v. Old Republic Nat'l Title Ins. Co., No. CV 21-1334, 2021 WL 4847803, at *2 n. 2 (E.D. Pa. Oct. 14, 2021) (concluding the parties made an implicit choice of law “by their briefs and arguments”). The court will not disturb this agreement where it exists. Accordingly, the court applies Massachusetts substantive law to Counts I (tortious interference with business advantage), II (tortious interference with contract), III (intentional interference with contract), IV (violation of Chapter 93A), V (breach of implied in-fact contract), VI (breach of non-compete), and VII (defamation).⁸ In addressing Defendants’ counterclaims, the court applies Massachusetts law to Counterclaims II (tortious interference with business advantage), III (tortious interference with contract), IV (fraudulent concealment), VII (violation of Chapter 93A), and VIII (civil conspiracy); but, by implicit agreement of the parties, it applies Tennessee law to Counterclaim V (aiding and abetting).⁹

In two respects, the court's choice of law requires further explanation. First, Mass. Gen. Laws ch. 156C, § 47, requires the court apply Tennessee law to questions of alter ego, veil piercing, and successor liability. Cf. Carriero v. Rhodes Gill & Co., No. CIV.A. 91-10515-RGS, 1995 WL 866092, at *2 (D. Mass. Jan. 13, 1995) (applying law of state of incorporation to successor liability even without relying on Section 47). Section 47 provides “a foreign limited liability company's organization and internal affairs and the liability of its members and managers shall be governed by the laws of the jurisdiction under which it is organized.” Mass. Gen. Laws ch. 156C, § 47; see Harrison v. NetCentric Corp., 744 N.E.2d 622, 629 (Mass. 2001) (citing Restatement (Second) of Conflict of Laws § 302 (1971), explaining “the rights and liabilities of a corporation are generally determined by the law of the State of incorporation”). Defendants argue for application of Tennessee law, while Plaintiffs contend the result is the same under either states’ law. Nevertheless, it is undisputed DPI and HBS are organized under the laws of Tennessee, and the court must apply a statutory provision governing choice of law before turning elsewhere. See New England Tel. & Tel. Co. v. Gourdeau Const. Co., 647 N.E.2d 42, 45 (Mass. 1995) (citing Restatement (Second) of Conflict of Laws § 6(1), directing courts to “follow any statutory directive on choice of law”). Thus, applying Massachusetts’ controlling provision, the court concludes it must look to Tennessee law. See Mariasch v. Gillette Co., 521 F.3d 68, 71-72 (1st Cir. 2008) (relying on statutory choice of law provision in applying “internal affairs” doctrine).

As to the second issue, the parties are not clear which states’ law governs the 2017 agreement's impact on this litigation. DPI contends Tennessee law controls. Plaintiffs do not specify which law they believe applicable. Nevertheless, the court concludes the result would be the same under either states’ law. “Accordingly, the court will not ‘make a formal choice of law.’ ” AIG Prop. Cas. Co. v. Green, 217 F.Supp.3d 415, 425 (D. Mass. 2016) (quoting Royal Bus. Grp., Inc. v. Realist, Inc., 933 F.2d 1056, 1064 (1st Cir. 1991)).

V. DISCUSSION

A. The DPI, Trigiani, and HBS Motions

1. Standing

Defendants argue Sonic Solutions and ACUS lack standing to press their claims. The standing doctrine has two dimensions, one constitutional, see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), and the other “prudential,” see Bank of Am. Corp. v. City of Miami, Fla., 581 U.S. 189, 196-97 (2017). Defendants challenge Sonic Solutions and ACUS's standing under both prongs.

Constitutional (or Article III) standing mandates “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). “[E]ach element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Katz, 672 F.3d at 71 (1st Cir. 2012) (quoting Lujan, 504 U.S. at 561). At summary judgment, this requires the non-moving party demonstrate standing with “affidavits [or other competent evidence] which will be taken to be true” and will be viewed in a light most favorable to the non-moving party. Nantucket Residents Against Turbines v. U.S. Bureau of Ocean Energy Mgmt., --F. Supp.3d --, No. 1:21-CV-11390-IT, 2023 WL 3510955, at *11 (D. Mass. May 17, 2023). Finally, “standing is not dispensed in gross․ The appropriate inquiry must be whether each particular plaintiff is entitled to have a federal court adjudicate each particular claim that he asserts.” Hochendoner v. Genzyme Corp., 823 F.3d 724, 733 (1st Cir. 2016) (internal citation and quotation marks omitted).

The court concludes that Sonic Solutions and ACUS have Article III standing. The First Circuit's decision in Gianfrancesco v. Town of Wrentham, 712 F.3d 634 (1st Cir. 2013), guides the court. Here, similar to Gianfrancesco, “the defendants’ actions, although taken against [SSAC's] business rather than against [Sonic Solutions and ACUS], caused [Sonic Solutions and ACUS] ‘actual financial injury’ by driving [SSAC] out of business.” Id. at 638 (citing Franchise Tax Bd. of California v. Alcan Aluminium Ltd., 493 U.S. 331, 336 (1990)) (alteration added). SSAC's collapse is also fairly traceable to actions taken by Defendants, including the decision to stop supplying SSAC and the sending of the April 26 notice to SSAC customers. These actions caused Sonic Solutions and ACUS to lose financial revenue otherwise accruing to their subsidiary. See, e.g., SBT Holdings, LLC v. Town of Westminster, 547 F.3d 28, 37-38 (1st Cir. 2008) (finding Article III injury based on derivative injury to members of an LLC). This harm is both concrete and particularized because it led to the destruction of their investment. It is also capable of redress by a favorable judicial decision providing for money damages. Accordingly, the court finds the minimum requirements for Article III standing are met.

Prudential standing, on the other hand, is “not exhaustively defined but encompass[es] ․ at least three broad principles: the general prohibition on a litigant's raising another person's legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in the representative branches, and the requirement that a plaintiff's complaint fall within the zone of interests protected by the law invoked.” Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 126 (2014) (internal quotation marks omitted). It reflects “a requirement that a party ‘assert his own legal rights and interests,’ not those of third parties.” Gianfrancesco, 712 F.3d at 638 (quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)). One branch of prudential standing is the so-called “shareholder-standing rule.” See Franchise Tax Bd., 493 U.S. at 336; see also In re Fin. Oversight & Mgmt. Bd. for Puerto Rico, 998 F.3d 35, 41-43 (1st Cir. 2021). This is a “longstanding equitable restriction that generally prohibits shareholders from initiating actions to enforce the rights of the corporation unless the corporation's management has refused to pursue the same action for reasons other than good-faith business judgment.” Franchise Tax Bd., 493 U.S. at 336; see also In re Dein Host, Inc., 835 F.2d 402, 406 (1st Cir. 1987) (noting the rule applies even when the financial destruction of the corporation is total). Two exceptions exist: (1) where the shareholder suffers an “injury that is peculiar to him alone, and [that] does not fall alike upon other stockholders”; and (2) where “it is absolutely inconceivable that the corporation itself would pursue a claim for the misconduct.” Pagan v. Calderon, 448 F.3d 16, 28-29 (1st Cir. 2006) (internal quotation marks omitted).

Sonic Solutions and ACUS assert eight counts against all Defendants. The court concludes they lack prudential standing to press any of these claims, except for Sonic Solutions’ claim in Count VI. As other sessions of this court have repeatedly held, when an LLC suffers injury, the “proper entities to complain are the LLCs that directly suffered harm, not its member-owners, who only indirectly suffered harm.” Taylor v. Moskow, No. CIV.A. 13-12675-FDS, 2014 WL 2573990, at *4 (D. Mass. June 6, 2014); accord Laverty v. Massad, 661 F. Supp. 2d 55, 62 (D. Mass. 2009). It is undisputed Sonic Solutions and ACUS were fifty-fifty members of SSAC. Counts I-IV and VII relate entirely to injury suffered by SSAC, not by its individual members. Count V is premised on an implied in-fact agreement between SSAC and DPI, not the individual members. ACUS and Sonic Solutions ceased doing business with DPI upon the formation of SSAC. Thus, any actions targeting customers or severing access to supply were felt directly by SSAC. ACUS and Sonic Solutions did not suffer a “peculiar” individualized injury to justify application of an exception to the shareholder standing rule, nor is SSAC unwilling to bring claims on behalf of itself. See Quarterman v. City of Springfield, 716 F. Supp. 2d 67, 73 (D. Mass. 2009) (explaining racial animus is the sort of peculiar injury justifying an exception to the general rule).

As to Count VI, Sonic Solutions does have prudential standing to prosecute breach of the 2012 non-compete agreement. Sonic Solutions was a signatory to the non-compete, thus it is entitled to enforce the agreement. Likewise, SSAC would have standing to bring Count VI if a jury resolved the factual dispute regarding Sonic Solutions’ assignment of the contract in its favor. ACUS, however, is not a signatory to the contract, and consequently has no standing to premise a breach of contract claim on the purported non-compete. See, e.g., Katz v. Pershing, LLC, 672 F.3d 64, 73 (1st Cir. 2012).

In a final bid to stave off the shareholder standing rule, Plaintiffs rely on Gianfrancesco v. Town of Wrentham, 712 F.3d 634, claiming the court is free to disregard the rule and reach the merits because prudential standing may be bypassed. This overreads Gianfrancesco. There, the First Circuit was addressing a motion to dismiss where it was unclear if the plaintiff was a corporation, and it bypassed the difficult prudential standing issue “in favor of a more straightforward resolution on the merits.” Id. at 638. Here, by contrast, the prudential standing question is clear, and the court will not bypass addressing an issue consistently interpreted as barring ACUS's and Sonic Solutions’ claims, especially since SSAC brings claims on its own behalf. Cf. United States v. Catala, 870 F.3d 6, 10 (1st Cir. 2017) (bypassing “in the interest of efficiency,” but noting it is a discretionary choice); In re Request from United Kingdom Pursuant to Treaty Between Gov't of U.S. & Gov't of United Kingdom on Mut. Assistance in Crim. Matters in the Matter of Dolours Price, 685 F.3d 1, 15-16 (1st Cir. 2012) (bypassing where standing issue was novel, but merits issue was straightforward and dispositive). All evidence in the record points to the entirety of the injury falling on SSAC (apart from Count VI), and any injury to ACUS and Sonic Solutions is derivative.

Finally, Count VIII (cancelation of trademarks) requires a special inquiry. “A person ‘who believes that he is or will be damaged ․ by the registration of a mark on the principal register’ is entitled to petition to cancel a registration.” Ascend Cap. LLC v. Moolex LLC, No. CV 21-10972-FDS, 2023 WL 5153767, at *5 (D. Mass. Aug. 10, 2023) (quoting 15 U.S.C. § 1064). After Lexmark, 572 U.S. at 129, 132, Lanham Act plaintiffs must demonstrate (1) an interest falling within the zone the Act was intended to protect; and (2) an injury proximately caused by violation of the Act. To satisfy this test, the party seeking to cancel a mark must “demonstrate a real interest in the proceeding and a reasonable belief of damage,” Australian Therapeutic Supplies Pty. Ltd. V. Naked TM, LLC, 965 F.3d 1370, 1373-74 (Fed. Cir. 2020), with damage meaning “injury to a commercial interest in reputation or sales,” Meenaxi Enter., Inc. v. Coca-Cola Co., 38 F.4th 1067, 1072 (Fed. Cir. 2022). ACUS and Sonic Solutions do not meet the zone of interest threshold. See, e.g., Zschaler v. Claneil Enterprises, Inc., 958 F. Supp. 929, 938 (D. Vt. 1997) (finding shareholders lack Lanham Act standing). They did not use the trademark they petition to cancel; rather, SSAC did. Likewise, the commercial injury to reputation and sales were suffered by SSAC, as it is undisputed SSAC took over ACUS's and Sonic Solutions’ distribution of DPI products.

Accordingly, Defendants’ motions for summary judgment with respect to Plaintiff ACUS are granted on all counts rendering it dismissed from the action. Defendants’ motions are granted with respect to Plaintiff Sonic Solutions on all but Count VI alleging breach of a non-compete agreement.

2. Successor, Alter Ego, and Personal Liability

Defendants seek summary judgment based on the legal relationship between DPI, HBS, and Trigiani. They argue HBS is not a proper defendant because it is a separate legal entity from DPI. Thus, according to Defendants, Plaintiffs lack a basis for asserting any claim against HBS because it did not inherit the liabilities of DPI and cannot be held liable for the wrongs of a separate corporate entity. Similarly, Defendants contend Trigiani is shielded from any personal liability by operation of the corporate veil protecting members of an LLC from individual liability on account of actions taken by the LLC. Plaintiffs counter by arguing HBS may be held liable as either a successor or alter ego of DPI, while Trigiani may be held liable for tortious acts he personally committed. Plaintiffs do not raise a triable issue of fact regarding HBS’ successor liability. Plaintiffs, however, do raise triable issues of fact regarding HBS’ status as an alter ego of DPI and Trigiani's personal liability.

Under Tennessee law, “a corporation that purchases the assets of another corporation does not automatically become liable for the selling company's obligations.” Layne Christensen Co. v. City of Franklin, Tennessee, 449 F. Supp. 3d 748, 757 (M.D. Tenn. 2020) (internal quotation omitted). “There are four recognized exceptions to this rule: (1) where the purchasing corporation expressly or implicitly agrees to assume the selling corporation's liabilities; (2) where the transaction amounts to a consolidation or merger of the two corporations; (3) where the purchasing corporation is a mere continuation of the selling corporation; and (4) where the transaction is entered into fraudulently, in order to escape liability for the obligations of the selling corporation.” Id. Plaintiffs wrongly contend HBS is a “mere continuation” of DPI. Tennessee courts find a “mere continuation” when “(1) a corporation transfers its assets; (2) the acquiring corporation pays less than adequate consideration for the assets; (3) the acquiring corporation continues the previous corporation[’]s business; (4) both corporations share at least one common officer who was instrumental in the transfer; and (5) the previous corporation is left incapable of paying its creditors.” Id. at 758. Plaintiffs point to no evidence suggesting DPI was incapable of paying its creditors after the creation of HBS, nor does the record support the conclusion DPI transferred the entirety of its assets to HBS. See IBC Mfg. Co. v. Velsicol Chem. Corp., 187 F.3d 635 (6th Cir. 1999) (table). Consequently, Plaintiffs have not raised a triable issue of fact with respect to successor liability.

Nevertheless, Tennessee law allows courts to disregard corporate entities “according to the circumstances present in the case, and the matter is particularly within the province of the trial court.” Boles v. Nat'l Dev. Co., 175 S.W.3d 226, 244 (Tenn. Ct. App. 2005). “Tennessee cases nearly uniformly consider the Allen factors in determining this issue.” S. Steel & Concrete, Inc. v. S. Steel & Constr., LLC, 2022 WL 1115033, at *8 (Tenn. Ct. App. Apr. 14, 2022). These are:

(1) whether there was a failure to collect paid in capital; (2) whether the corporation was grossly undercapitalized; (3) the nonissuance of stock certificates; (4) the sole ownership of stock by one individual; (5) the use of the same office or business location; (6) the employment of the same employees or attorneys; (7) the use of the corporation as an instrumentality or business conduit for an individual or another corporation; (8) the diversion of corporate assets by or to a stockholder or other entity to the detriment of creditors, or the manipulation of assets and liabilities in another; (9) the use of the corporation as a subterfuge in illegal transactions; (10) the formation and use of the corporation to transfer to it the existing liability of another person or entity; and (11) the failure to maintain arms length relationships among related entities.

Fed. Deposit Ins. Corp. v. Allen, 584 F. Supp. 386, 397 (E.D. Tenn. 1984). “No single factor among those listed is conclusive, nor is it required that all of these factors support piercing the corporate veil; typically, courts will rely on a combination of the factors in deciding the issue.” Rogers v. Louisville Land Co., 367 S.W.3d 196, 215 (Tenn. 2012).

Plaintiffs produced evidence supporting several of the Allen factors. Trigiani is the sole member of both DPI and HBS. DPI and HBS use the same offices, have the same attorney, and file joint financial statements. HBS relies on DPI employees, products, and intellectual property without the need for written agreements authorizing this use. DPI's rationale for spinning off HBS was facilitating the distribution of its algae remediation products by serving as a “business conduit.” A reasonable factfinder could conclude the entities fail to maintain an arm's length relationship. Finally, contrary to Defendants’ contention, Tennessee law does not solely limit alter ego analysis to the textbook example of piercing the veil to reach a shareholder; it authorizes the inquiry “upon a showing that [the entity] is a sham or a dummy or where necessary to accomplish justice.” Oceanics Sch., Inc. v. Barbour, 112 S.W.3d 135, 140 (Tenn. Ct. App. 2003); see also Smith v. Hi-Speed, Inc., 536 S.W.3d 458, 482 n. 12 (Tenn. Ct. App. 2016) (explaining Tennessee law will treat nominally separate corporations as the same entity upon the proper factual showing).

Plaintiffs also point to genuine factual disputes regarding Trigiani's personal tortious conduct. Generally, the members of an LLC are not personally liable for its wrongs. See Tenn. Code § 48-217-101(a)(1). This general rule does not apply when “a member ․ become[s] personally liable in contract, tort or otherwise by reason of such person's own acts or conduct.” See Tenn. Code § 48-217-101(a)(3); see also Gross v. McKenna, No. E2005-02488-COA-R3CV, 2007 WL 3171155, at *5 (Tenn. Ct. App. Oct. 30, 2007) (upholding liability finding against member of LLC). It is undisputed Trigiani was involved in all the alleged tortious conduct. For example, he drafted, signed, and sent the customer sales notice underlying the defamation and tortious interference claims. He was also directly responsible for the decision to abruptly cease supplying SSAC. While Trigiani emphasizes that he was acting on behalf of the business entities, “[i]t is settled law that an agent cannot escape liability for tortious acts ․ against third persons simply because the agent was acting within the scope of the agency or at the direction of the employer.” Brungard v. Caprice Recs., Inc., 608 S.W.2d 585, 591 (Tenn. Ct. App. 1980). As a result, Defendants cannot escape liability at this stage by relying on nominally distinct corporate identities. Therefore, the court turns to the parties claim specific arguments.

3. Claim Specific Arguments

a. Implied In-fact Contract (Count V)

The majority of SSAC's claims rely on the existence of a triable issue of fact regarding an implied-in-fact contract. Accordingly, the court begins its analysis with Count V.

SSAC asserts it had an exclusive dealership agreement with DPI. No party claims a written contract exists, but under Massachusetts law a “contract implied in fact may be found to exist from the conduct and relations of the parties.” Squeri v. Mount Ida Coll., 954 F.3d 56, 71 (1st Cir. 2020). In the context of implied distributorship agreements, the existence of an implied-in-fact agreement is a question uniquely suited for the jury to resolve. See, e.g., Primarque Prod. Co. v. Williams W. & Witts Prod. Co., 988 F.3d 26, 34-39 (1st Cir. 2021) (upholding denial of judgment as a matter of law on the question). The parties proffer dueling sworn testimony, meaning “[t]his case is rife with disputes of material fact that will depend [on] the jury's assessment of witnesses’ credibility.” Gaetani v. Hadley, No. CV 14-30057-MGM, 2019 WL 1440405, at *7 (D. Mass. Mar. 29, 2019). Beyond witness testimony, SSAC points to email communications from Trigiani implying the existence of an agreement. This inference is strengthened by Trigiani's and Bourbon's deposition testimony regarding channeling sales to SSAC. Further supporting the court's conclusion, SSAC identifies emails from DPI employees referring to “distributorship” pricing agreements between SSAC and DPI. Ultimately, the conflicting testimony regarding the scope, substance, and mere existence of the implied distributorship agreement counsels against summary judgment. The court concludes a jury resolving all factual disputes in SSAC's favor could find the existence of an implied-in-fact contract.

Defendants raise a subsidiary argument that a distributorship agreement without an express time limit is terminable at-will with reasonable notice. This is a correct statement of Massachusetts law. See Mass. U.C.C. § 2-309(3); see also Cherick Distributors, Inc. v. Polar Corp., 669 N.E.2d 218, 220 (Mass. App. Ct. 1996). Defendants further request that the court determine, as a matter of law, that the period of “reasonable notice” was sixty days. But determining what constitutes reasonable notice is a question for the finder of fact. See Primarque, 988 F.3d at 33-38 (1st Cir. 2021); accord RGJ Assocs., Inc. v. Stainsafe, Inc., 300 F. Supp. 2d 250, 254 (D. Mass. 2004) (“Determining what constitutes a reasonable notification of termination time as well as the date of termination is a question for the finder of fact.”). This is particularly true where, as here, Defendants offer no evidence justifying their proposed termination period, while the non-moving party points to sworn testimony indicating sixty days is not a reasonable termination period. Defendants’ motion for summary judgment is therefore denied with respect to Count V.

b. Breach of Non-compete (Count VI)

Throughout this litigation, Sonic Solutions operated according to the theory that its breach of non-compete claim arose from an operative 2012 agreement. However, no party disputes signing a new agreement in 2017. The subject matter of the 2017 agreement is the same as the 2012—facilitating the exchange of confidential information to further a business relationship between DPI and Sonic Solutions. The two agreements contain one materially different term—namely, the 2017 agreement does not contain a non-compete clause.

The removal of the non-compete clause is materially significant. A later in time agreement between the same parties may constitute a “substituted contract.” Haskell v. Versyss Liquidating Tr., 815 N.E.2d 225, 232-33 (Mass. App. Ct. 2004).¹⁰ The primary indicia of a substituted contract is “a term that is inconsistent with a term of an earlier contract between the parties.” Id. at 232 (quoting Restatement (Second) of Contracts § 279, cmt. A (1981)). “It is well established, under the parol evidence rule, that ‘[a] binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them.’ ” Brennan v. Carvel Corp., 929 F.2d 801, 806 (1st Cir. 1991) (quoting Restatement (Second) of Contracts § 213(1)). By excluding the non-compete clause, the 2017 agreement materially altered the written terms of the parties’ understanding in a way that was inconsistent with the 2012 agreement. Additionally, the 2017 agreement explicitly contained an integration clause, and while not necessarily dispositive, such integration clauses are accorded substantial weight when they reflect arms-length negotiations between sophisticated parties. See, e.g., Guldseth v. Fam. Med. Assocs. LLC, 45 F.4th 526, 535-36 (1st Cir. 2022) (collecting cases). Accordingly, the court concludes the 2012 agreement was withdrawn and the 2017 agreement controlled the parties’ relationship.

Sonic Solutions suggests Defendants are still liable under the 2017 agreement. But this argument disregards the First Amended Complaint's failure to mention the 2017 agreement or provide a theory explaining its breach. Sonic Solutions “cannot allege breach of one agreement in its complaint and raise breach of an entirely different agreement when it confronts difficulty in proving its original allegation.” Diomed, Inc. v. Vascular Sols., Inc., 417 F. Supp. 2d 137, 141 (D. Mass. 2006). Not only is Sonic Solutions relying on a new contract, but it is also inserting a new theory of liability based on breach of a confidentiality provision as opposed to a non-compete clause. Allowing an amendment by briefing would circumvent the purpose of Federal Rule of Civil Procedure 15. Formulatrix, Inc. v. Rigaku Automation, Inc., 344 F. Supp. 3d 410, 425 (D. Mass. 2018). Accordingly, Defendants’ motions for summary judgment are granted on Count VI, rendering Plaintiff Sonic Solutions dismissed from the action, as this was the only claim it had standing to assert.

c. Defamation (Count VII)

In Count VII, SSAC asserts the April 26, 2021 “Ownership, Distribution and Sales Clarification” document/memo sent by DPI was defamatory. To succeed, SSAC must show: “(1) the defendant made a false statement about him to a third party; (2) the statement was defamatory in that it could damage the plaintiff's reputation in the community; (3) the defendant was at fault in making the statement; and (4) the statement either caused economic loss or is actionable without economic loss.” Landino v. Massachusetts Tchrs. Ass'n, 621 F. Supp. 3d 185, 191-92 (D. Mass. 2022) (internal quotation marks omitted). In response, Defendants raise essentially three arguments supporting summary judgment. None is persuasive.

First, Defendants contend that because the April 26 notice did not identify SSAC, it cannot be defamatory. This position misreads Massachusetts law. “[T]he test whether [an alleged defamatory statement] is of and concerning the plaintiff is met by proving either (1) that the defendant intended the words to refer to the plaintiff and that they were so understood or (2) that persons could reasonably interpret the defendant's words to refer to the plaintiff and that the defendant was negligent in publishing them in such a way that they could be so understood.” HipSaver, Inc. v. Kiel, 984 N.E.2d 755, 756 (Mass. 2013). SSAC points to emails where customers immediately understood Trigiani as referring to SSAC, and others where Trigiani sent follow-up emails referring to SSAC, thereby satisfying the “of and concerning” requirement.

Next, Defendants argue the April 2021 notice was true. Defendants’ truth defense cannot succeed at summary judgment because it depends on resolution of the factual dispute regarding the existence of an implied in-fact contract. See, e.g., Alharbi v. Theblaze, Inc., 199 F.Supp.3d 334, 538-39 (D. Mass. 2016) (illustrating the fact intensive nature of truth analysis).

Finally, Defendants assert SSAC failed to produce evidence of economic loss. “[B]ut statements that may prejudice the plaintiff's profession or business” are defamatory per se. Ravnikar v. Bogojavlensky, 782 N.E.2d 508, 511 (Mass. 2003). Producing evidence showing a communication “reflect[ed] discredit upon the method by which the corporation conducts its business” is sufficient to withstand summary judgment, leaving the damages question for a jury. N. Shore Pharmacy Servs., Inc. v. Breslin Assocs. Consulting LLC, 491 F. Supp. 2d 111, 128 (D. Mass. 2007) (internal citation omitted). A reasonable jury could find this communication reflects discredit on SSAC by implying it was lying about its exclusive right to distribute DPI products. A jury could also conclude that a notice insinuating SSAC misled customers for purposes of generating sales would prejudice its profession or business. Defendants’ motions for summary judgment are therefore denied as to Count VII.

d. Tortious Interference with Advantageous Business Relationship (Count I), Tortious Interference with Contract (Count II), and Intentional Interference with Contract (Count III)

The court concludes SSAC raises triable issues of fact regarding each of its tortious interference claims. Tortious interference with advantageous business relationship requires a plaintiff show “(1) he had an advantageous relationship with a third party (e.g., a present or prospective contract or [business] relationship); (2) the defendant knowingly induced a breaking of the relationship; (3) the defendant's interference with the relationship, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's actions.” Hamann v. Carpenter, 937 F.3d 86, 93 (1st Cir. 2019) (quoting Blackstone v. Cashman, 860 N.E.2d 7, 12-13 (Mass. 2007)). Tortious interference with contract requires a plaintiff to show “(1) he had a contract with a third party; (2) the defendant knowingly interfered with that contract ․; (3) the defendant's interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's actions.” Id. at 90. Finally, intentional interference with contract requires a plaintiff to show “(1) he had a contract with a third party; (2) the defendant knowingly interfered with that contract; (3) the defendant's interference, in addition to being intentional, was improper in motive or means; and (4) the plaintiff was harmed by the defendant's actions.” Martone Place, LLC v. City of Springfield, No. 16-CV-30170-MAP, 2017 WL 5889222, at *24 (D. Mass. Nov. 29, 2017).

Defendants contend SSAC cannot demonstrate an essential element of all three tortious interference claims—use of improper motive or means. The interference must be “wrongful by some measure beyond the fact of interference itself.” United Truck Leasing Corp. v. Geltman, 551 N.E.2d 20, 23 (Mass. 1990). Generally, this requires a showing that the conduct “violated a statute or a rule of common law” or the party “used threats, misrepresented any facts, defamed anyone, or used any other improper means in relation to either the existing contract or the prospective one.” Id. at 24. Accordingly, defamation is a predicate improper act for tortious interference, and SSAC has raised a triable issue with respect to its defamation claim. See Cavicchi v. Koski, 855 N.E.2d 654, 658 (Mass. App. Ct. 2006). Furthermore, a reasonable finder of fact could also conclude Defendants’ abrupt decision to terminate its supplier relationship with SSAC constitutes wrongful conduct because Defendants had a “legal obligation to provide ․ [SSAC] with reasonable notice of termination.” See Primarque, 988 F.3d at 40. SSAC points to several customers who stopped doing business directly after receiving communications from Defendants, supporting the contention Defendants interfered with SSAC's customers. In short, genuine disputes of material fact preclude summary judgment on the improper motive or means element.

Defendants also argue SSAC produced insufficient evidence of the fourth element—harm. Specifically, they attack the methodology of Plaintiff's expert, Dr. Craig Moore, contending his report fails to account for mitigation of damages. This argument mirrors those raised in Defendants’ motion in limine seeking exclusion of Dr. Moore's report. (See Dkt. No. 176).

“The admission of expert evidence is governed by Federal Rule of Evidence 702, which codified the Supreme Court's holding in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), and its progeny” Massachusetts Mut. Life Ins. Co. v. DB Structured Prod., Inc., No. CIV.A. 11-30039-MGM, 2015 WL 2130060, at *8 (D. Mass. May 7, 2015).¹¹ “The trial court must determine whether the expert's testimony ‘both rests on a reliable foundation and is relevant to the task at hand’ and whether the expert is qualified” Id. (quoting Daubert, 509 U.S. at 597). Therefore, the “court must answer three questions: ‘Is this junk science?’ ‘Is this a junk scientist?’ ‘Is this a junk opinion?’ ” Id. (quoting First Choice Armor & Equip., Inc. v. Toyobo Am., Inc., 839 F. Supp. 2d 407, 416 (D. Mass. 2012)).

Daubert identified four factors to assist trial courts in determining admissibility of an expert opinion: “(1) whether the theory or technique can be and has been tested; (2) whether the technique has been subject to peer review and publication; (3) the technique's known or potential rate of error; and (4) the level of the theory's or technique's acceptance within the relevant discipline.” Id.. The factors are not a definitive checklist; the court only needs satisfaction the opinion rests on “good grounds, based on what is known,” Daubert, 509 U.S. at 590. Once good grounds are shown, “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Id. at 596.

“The Daubert regime can play a role during the summary judgment phase of civil litigation.” Cortes-Irizarry v. Corporacion Insular De Seguros, 111 F.3d 184, 188 (1st Cir. 1997). However, the First Circuit has warned:

The fact that Daubert can be used in connection with summary judgment motions does not mean that it should be used profligately. A trial setting normally will provide the best operating environment for the triage which Daubert demands. Voir Dire is an extremely helpful device in evaluating proffered expert testimony ․ and this device is not readily available in the course of summary judgment proceedings. Moreover, given the complex factual inquire required by Daubert, courts will be hard-pressed in all but the most clearcut cases to gauge the reliability of expert proof on a truncated record. Because the summary judgment process does not conform well to the discipline that Daubert imposes, the Daubert regime should be employed only with great care and circumspection at the summary judgment stage.

Id. (internal citation omitted).

At this stage, the court will not exclude Dr. Moore's expert testimony.¹² Under First Circuit precedent, exclusion of an expert report at summary judgment is only warranted when the report's “defects are obvious on the face of [the] proffer.” Cortes-Irizarry, 111 F.3d at 188 (alteration added). But “[a]n economist's failure to consider certain data is not fatal to admissibility if the expert sufficiently explains her choice of data for her analysis.” In re Pharm. Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 20, 86 (D. Mass. 2007) (citing Cummings v. Standard Reg. Co., 265 F.3d 56, 65 (1st Cir. 2001)). Defendants’ disagreements with Dr. Moore's methodology focus on his use of certain underlying data without considering other potentially relevant data. These are arguments for the jury to consider when deliberating on the weight due Dr. Moore's opinion. See Pagliaroni v. Mastic Home Exteriors, Inc., No. CV 12-10164-DJC, 2015 WL 5568624, at *8 (D. Mass. Sept. 22, 2015).

By way of example, Defendants’ argument assailing Dr. Moore for relying on an ill-defined loss period goes to the weight of his opinion, not its admissibility. Cf. Seahorse Marine Supplies, Inc. v. Puerto Rico Sun Oil Co., 295 F.3d 68, 81 (1st Cir. 2002) (rejecting admissibility challenge based on determinations within the province of the jury). This is also true of Defendants’ contentions that Dr. Moore failed to conduct an “independent market review,” conflated unjust enrichment and lost profit analysis, and ignored mitigation of damages. Cf. Ferring Pharms., Inc. v. Braintree Lab'ys, Inc., 210 F. Supp. 3d 252, 255-56 (D. Mass. 2016) (refusing to exclude expert on ground he could have used a better financial model). Likewise, while the parties dispute the correct method for determining the present value of lost profits, this is traditionally viewed as a question of fact. See, e.g., Bacchi v. Massachusetts Mut. Life Ins. Co., No. CIV.A. 12-11280-JLT, 2013 WL 4587255, at *2 (D. Mass. Aug. 27, 2013) (rejecting proposition the court may determine proper calculation of present value as a matter of law); Energy Cap. Corp. v. United States, 302 F.3d 1314, 1333 (Fed. Cir. 2002) (“The appropriate discount rate is a question of fact.”). Each of these assertions could undercut Dr. Moore's credibility or cause the jury to reduce its damages calculation. But they are not grounds for excluding the report at summary judgment when, as here, the report explains the rationale for its economic analysis.

Based on the face of the proffer, Dr. Moore's report is grounded in defensible economic assumptions regarding SSAC's potential projected economic performance and relies on methods of valuation sufficient for a reasonable jury to calculate lost profit damages without resorting to the “remote, speculative [or] hypothetical.” Cambridge Plating Co. v. Napco, Inc., 85 F.3d 752, 771 (1st Cir. 1996) (citing Augat, Inc. v. Aegis, Inc. (“Augat II”), 631 N.E.2d 995, 998 n. 4 (1994)). Thus, the report contains sufficient explanation of Dr. Moore's methodological choices to overcome a Daubert challenge at this posture. Defendants’ motion in limine is therefore denied without prejudice to renewal on appropriate grounds before trial.

In light of Dr. Moore's report, Defendants also fail to demonstrate they are entitled to summary judgment based on the fourth tortious interference factor—harm. Moreover, SSAC presents a triable issue of harm even without presenting an expert report. A reasonable jury could conclude Defendants’ conduct caused SSAC's business to collapse. This collapse constitutes “pecuniary loss” for purposes of demonstrating the harm element of a tortious interference claim. See Tuli v. Brigham & Women's Hosp., 656 F.3d 33, 44 (1st Cir. 2011) (upholding jury calculation of pecuniary loss based on a rational view of the evidence); see also Primarque, 988 F.3d at 41 (noting Massachusetts’ law accepts a degree of inherent uncertainty in calculating business tort damages). The resulting question of damages is for the jury.

Accordingly, Defendants’ motions for summary judgment are denied as to Counts I, II, and III.

e. Violation of Mass. Gen. L. c. 93A (Count IV)

In Count IV, SSAC asserts a claim for unfair or deceptive trade practices in violation of Mass. Gen. L. c. 93A, § 11. The court concludes this claim fails for lack of the requisite nexus to the Commonwealth of Massachusetts.

Section 11 contains the following jurisdictional prerequisite: “the actions and transactions constituting the alleged unfair method of competition or the unfair or deceptive act or practice occurred primarily and substantially within the commonwealth.” Mass. Gen. Laws ch. 93A, § 11. The Massachusetts Supreme Judicial Court declined to specify a “precise formula” for the “primarily and substantially” requirement, opting for a holistic approach instead. See Kuwaiti Danish Comput. Co. v. Digital Equipment Corp., 781 N.E.2d 787, 798-99 (Mass. 2003). Following Kuwaiti Danish, the First Circuit provided the following guidance to district courts addressing Chapter 93A claims:

In holding that a set list of factors was of limited utility to the Chapter 93A inquiry, see 781 N.E.2d at 798, the Kuwaiti Danish court certainly did not hold or imply that the factors identified by the district court (derived from our Roche [citing Clinton Hosp. Ass'n v. Corson Grp., Inc., 907 F.2d 1260, 1265-66 (1st Cir. 1990)] decision) are irrelevant to the Chapter 93A calculus. Nor did the court suggest that its prior decisions regarding how particular fact patterns are to be interpreted for purposes of Chapter 93A's situs requirement—for example, situations in which a misrepresentation is made in Massachusetts to a third party in another state who relies upon it there, see Bushkin, 473 N.E.2d at 672—have been overruled or superseded.

Uncle Henry's Inc. v. Plaut Consulting Co., 399 F.3d 33, 45 (1st Cir. 2005) (alteration added).

Thus, the factors identified by the First Circuit in Clinton, 907 F.2d 1260, remain relevant. These factors examine (i) the locus of the deceptive or unfair acts and practices, (ii) the location where the wrongful conduct was received and acted upon, and (iii) the place of injury or loss. Clinton, 907 F.2d at 1265-66; see also Smartling, Inc. v. Skawa Innovation Ltd., 358 F. Supp. 3d 124, 151-52 (D. Mass. 2019) (applying Clinton factors after Kuwaiti Danish). In assessing the nexus, “a court focuses solely on the actionable conduct said to give rise to the violation; other conduct, no matter where it takes place, may not be considered on the question.” Spring Inv. Servs., Inc. v. Carrington Cap. Mgmt., LLC, No. CIV.A. 10-10166-FDS, 2013 WL 1703890, at *12 (D. Mass. Apr. 18, 2013). The burden of demonstrating that the alleged offensive conduct occurred primarily and substantially outside of Massachusetts rests with Defendants. See Zyla v. Wadsworth, Div. of Thomson Corp., 360 F.3d 243, 255 (1st Cir. 2004).

The first Clinton factor—locus of the unfair or deceptive act—points to Tennessee. It is undisputed Defendants are based in Tennessee. Nearly all the alleged wrongful conduct flows from high-level decisions in Tennessee. Trigiani, the central bad actor under Plaintiff's theory, operated from Tennessee. He drafted, signed, and sent DPI's notice to customers there. He also made the decision to terminate the business relationship from Tennessee.

Application of the second factor also militates against a conclusion that the offending actions occurred primarily and substantially within the Commonwealth. See Yankee Candle Co., Inc. v. Bridgewater Candle Co., LLC, 107 F. Supp. 2d 82, 88 (D. Mass. 2000), aff'd, 259 F.3d 25 (1st Cir. 2001). Yankee Candle is particularly instructive, as there, much like here, the crux of the alleged wrongful conduct were misrepresentations made to the plaintiff's customers. See id. at 88. Taking the plaintiff's theory of misrepresentation at face value, the Yankee Candle court assessed whether those customers received the deception in Massachusetts. Id. The court explained that “the deception in this case was conceived and concocted outside Massachusetts and visited, overwhelmingly, upon persons and entities outside the Commonwealth.” Id. SSAC's complaint depicts a client base scattered across the globe.¹³ “[H]ere [much like in Yankee Candle] the direct impact of the deception—to the extent it occurred—was on customers all over the country, few of whom were in Massachusetts. Where wrongdoing is not focused on Massachusetts but has relevant and substantial impact across the country, the “primarily” requirement of section 11 cannot be satisfied.” Fishman Transducers, Inc. v. Paul, 684 F3d 187, 197 (1st 2012) (alterations added). Accordingly, the second factor favors Defendants.

The third factor favors SSAC. SSAC is a Massachusetts company and suffered any potential financial harm in Massachusetts. When place of injury, however, ‘is the only factor weighing in favor of a claimant, the admonition of Massachusetts courts that liability under chapter 93A is not to be imposed lightly is particularly relevant.” Yankee Candle Co., Inc., 107 F. Supp. 2d at 89 (quoting Roche v. Royal Bank of Canada, 109 F.3d 820, 831 (1st Cir. 1997)); see also Smartling, Inc., 358 F. Supp. 3d at 153. If “place of injury” were outcome determinative, Section 11’s jurisdictional requirement would essentially become superfluous, at least for Massachusetts-based plaintiffs, who will almost always experience their harm in Massachusetts. See Spring Inv. Servs., Inc. v. Carrington Cap. Mgmt., LLC, No. CIV.A. 10-10166-FDS, 2013 WL 1703890, at *13 (D. Mass. Apr. 18, 2013) (citing Makino, U.S.A., Inc. v. Metlife Cap. Credit Corp., 518 N.E.2d 519, 523 (Mass. App. Ct. 1988)).

After balancing the three factors, the court concludes the allegedly deceptive conduct occurred “primarily and substantially” outside of Massachusetts. SSAC's 93A claim is therefore not viable, and Defendants’ motions for summary judgment are granted as to Count IV.

f. Cancellation of Trademark (Count VIII)

Plaintiff SSAC seeks cancellation of two trademarks registered by Defendants with the USPTO—No. 5,076,578 and No. 5,080,549. To support cancellation, SSAC alleges (1) the trademarks were procured by fraud, and (2) the trademarks have been “nakedly licensed,” justifying an invocation of this court's authority under 15 U.S.C. § 1119 to cancel any registered trademark.

As to SSAC's first theory, 15 U.S.C. § 1064(3) allows a party to petition for invalidation of a mark based on fraud. A plaintiff must demonstrate: “(1) that defendant made a false representation to the [United States Patent and Trademark Office (“PTO”)] regarding a material fact; (2) that defendant knew that the representation was false; (3) that defendant intended to induce the PTO to act in reliance on the misrepresentation; and (4) the PTO was thereby deceived into registering the mark.” Dubliner, Inc. v. E. Coast Tavern Grp., Inc., -- F. Supp.3d--, No. CV 23-10567-JGD, 2023 WL 8627627, at *5 (D. Mass. Dec. 13, 2023) (cleaned up and internal citation omitted). Fraudulent intent “can be inferred from indirect and circumstantial evidence[,] [b]ut such evidence must still be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement.” In re Bose Corp., 580 F.3d 1240, 1245 (Fed. Cir. 2009) (internal quotation omitted) (alteration in original). “[A]bsent the requisite intent to mislead the PTO, even a material misrepresentation would not qualify as fraud under the Lanham Act warranting cancellation.” Id. at 1243.

SSAC cannot support its claim for cancellation by fraud on the USPTO. Plaintiff points to no record evidence indicating any specific intent to deceive. Instead, Plaintiff fixates on demonstrating a misrepresentation. But, as the Federal Circuit noted in Bose, the mere existence of a material misrepresentation is not sufficient absent evidence of intent to deceive. Id. The court can discern no evidence of intent in the record, and SSAC advances nothing but the speculative allegations of fraud contained in the First Amended Complaint. Even those conclusory statements amount to no more than negligent, rather than knowing, misrepresentation, and “[a] plaintiff cannot [succeed] merely [by] show[ing] that the trademark holder ‘should have known’ that the application contained false statements of material fact.” MPC Franchise, LLC v. Tarntino, 826 F.3d 653, 659 (2d Cir. 2016). Fraud on the USPTO must be “proven to the hilt,” and based on this record, no fact finder could come to that conclusion. Smith Int'l, Inc. v. Olin Corp., 209 U.S.P.Q. 1033, 1044 (T.T.A.B. 1981). Summary judgment in Defendants’ favor is therefore appropriate on the fraudulent procurement theory.

As to SSAC's second theory, abandonment by “naked licensing” occurs when a party allows others “to use the mark without exercising ‘reasonable control over the nature and quality of the goods, services, or business on which the [mark] is used by the licensee.’ ” Blake v. Pro. Coin Grading Serv., 898 F. Supp. 2d 365, 385 n. 13 (D. Mass. 2012) (internal citation omitted); see also Restatement (Third) of Unfair Competition § 33 (1995). The focus of the naked licensing inquiry is on the “quality control” exercised over the underlying good protected by the mark. Barcamerica Int'l USA Tr. v. Tyfield Importers, Inc., 289 F.3d 589, 595-96 (9th Cir. 2002). SSAC points to no record evidence concerning the quality of the underlying goods protected by DPI's marks. Instead, SSAC focuses on DPI's general policies with respect to licensing marks, but this is insufficient absent a showing that the actual quality of the underlying goods was not controlled.

Accordingly, Defendants’ motions for summary judgment are granted as to Count VIII.

B. SSAC's Motion

SSAC moves for summary judgment on every counterclaim save for Counterclaim I. For the following reasons, the court grants the motion in its entirety.

a. Tortious Interference with Advantageous Business Relations (Counterclaim II) and Contract (Counterclaim III), Fraudulent Concealment (Counterclaim IV), and Aiding and Abetting (Counterclaim V).

Defendants assert four related tort-based claims: tortious interference with advantageous business relations, tortious interference with contract, fraudulent concealment, and aiding and abetting breach of a fiduciary duty. The court concludes Defendants fail to raise a triable issue of fact with respect to any of these claims.

Counterclaim II, alleging tortious interference with advantageous business relations, fails because Defendants cannot satisfy the third element—use of improper means by Plaintiff. The entirety of their claim rests on actions by non-parties Charles Morgan and Lawrence Field.¹⁴ Defendants have produced no evidence to validate their theory that SSAC knew Morgan was acting without authority. Instead, they rely on Trigiani's repeated statements indicating Morgan lacked authority. These statements are insufficient, as they require “the court to draw the speculative and wholly unsupported inference that” Trigiani presently saying Morgan lacked authority necessarily means SSAC had contemporaneous awareness of the fact. Zaleski v. Costco Wholesale Corp., No. CV 20-30049-MGM, 2023 WL 3679048, at *3 (D. Mass. Jan. 3, 2023). Defendants also cannot demonstrate Plaintiff had any role in the alleged theft of DPI property. To the contrary, Trigiani's entire discussion of the theft in his deposition fails to mention Plaintiff at all. These allegations have no relation to SSAC. Because the tortious interference with business relations claim is unsupported by any record evidence, summary judgment in favor of Plaintiff is appropriate.

The court also grants Plaintiff's motion for summary judgment as to Counterclaim III, alleging tortious interference with contract, as Defendants fail to point to any evidence Plaintiff knew of a contract. Massachusetts law requires that the tortfeasor know of the contract with which they allegedly interfere. See Yiakas v. Savoy, 526 N.E.2d 1305, 1309 (Mass. App. Ct. 1988); accord Gouin v. Gouin, 249 F. Supp. 2d 62, 75 (D. Mass. 2003). It is undisputed all DPI employment agreements are kept in an employee's personnel file at DPI headquarters in Tennessee. It is also undisputed DPI employees are not allowed to see their own employment file. And, finally, it is undisputed SSAC employee Assael was not informed of Morgan's employment agreement. (Dkt. No. 204, ¶ 5). Absent any evidence that Plaintiff had knowledge of the contract, Defendants’ counterclaim fails as a matter of law.

As to counterclaim IV, fraudulent concealment is not an independent tort under Massachusetts law. See Niedner v. Ortho-McNeil Pharm., Inc., 58 N.E.3d 1080, 1087 n. 7 (Mass. App. Ct. 2016). Rather, the doctrine of fraudulent concealment “provides for tolling of a statute of limitations under certain circumstances, but it does not provide an independent cause of action.” Ingalls v. Adams Cmty. Bank, No. CV 19-30006-MGM, 2020 WL 3722317, at *7 (D. Mass. Mar. 25, 2020). That alone is a basis to grant summary judgment on Counterclaim IV.

However, even assuming Defendants have articulated a cognizable theory of fraud based on a failure to disclose information, summary judgment is still appropriate. Under Massachusetts law, “[t]here can be no actionable claim of fraud for failure to disclose in the absence of a duty to disclose.” Royal Bus. Grp., Inc. v. Realist, Inc., 933 F.2d 1056, 1065 (1st Cir. 1991). The law recognizes three such duties: “where (i) there is a fiduciary or other similar relation of trust and confidence, (ii) there are matters known to the speaker that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading, or (iii) the nondisclosed fact is basic to, or goes to the essence of, the transaction.” Stolzoff v. Waste Sys. Int'l, Inc., 792 N.E.2d 1031, 1044 (Mass. App. Ct. 2003). First, no fiduciary or similar relationship existed between Defendants and Plaintiffs. See Davidson v. Gen. Motors Corp., 786 N.E.2d 845, 850 (Mass. App. Ct. 2003) (noting general business relations do not create a fiduciary relationship); see also Indus. Gen. Corp. v. Sequoia Pac. Sys. Corp., 44 F.3d 40, 44-46 (1st Cir. 1995) (refusing to find the existence of a fiduciary relationship in a manufacturer-supplier context). Next, Defendants make no argument in support of the second theory, thus waiving it. See Coons v. A. F. Chapman Corp., No. CV 03-11900-MBB, 2008 WL 11510792, at *9 n. 22 (D. Mass. Sept. 24, 2008). As to the third theory, Defendants produced no evidence SSAC owed them a duty based on non-disclosure. Defendants contend SSAC had an obligation to inform DPI of communications with a potential Uruguayan customer, wherein a DPI employee allegedly acted without corporate authority. Defendants’ theory of fraud is dependent on SSAC knowing Morgan was acting outside the scope of his employment, but, as the court has explained, the only evidence they offer to demonstrate this knowledge is conclusory and insufficient at the summary judgment stage. See Lang v. Wal-Mart Stores E., L.P., 813 F.3d 447, 460 (1st Cir. 2016) (“[A] party cannot ward off summary judgment with ‘proffers that depend ․ on arrant speculation, optimistic surmise, or farfetched inference.’ ” (quoting Fragoso v. Lopez, 991 F.2d 878, 887 (1st Cir. 1993)).

Finally, the court addresses Counterclaim V, aiding and abetting breach of fiduciary duties. In Tennessee, a civil cause of action relying on a theory of aiding and abetting requires the plaintiff to show: “the defendant knew that his companions’ conduct constituted a breach of duty, and that he gave substantial assistance or encouragement to them in their acts.” PNC Multifamily Cap. Institutional Fund XXVI Ltd. P'ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d 525, 552 (Tenn. Ct. App. 2012). Again, Defendants produced no evidence to support the crucial knowledge requirement. Defendants’ repeated assertions that Morgan lacked authority do not constitute “definite, competent evidence demonstrating the existence of a genuine dispute,” Murray v. Kindred Nursing Ctrs. W. LLC, 789 F.3d 20, 25 (1st Cir. 2015) (internal quotation marks omitted), regarding SSAC's knowledge of any breach of fiduciary duty.

Accordingly, SSAC's motion for summary judgment is granted as to Counterclaims II, III, IV, and V.

b. Trademark Infringement (Counterclaim VI)

SSAC contends Counterclaim VI, trademark infringement, is moot. Specifically, it asserts that SSAC is no longer a functioning business, thus the threat of infringement no longer exists. The burden of demonstrating mootness falls on the party asserting it, Boston Bit Labs, Inc. v. Baker, 11 F.4th 3, 8 (1st Cir. 2021), and the central focus is whether the court can grant relief that would “make a difference to the legal interests of the parties (as distinct from their psyches, which might remain deeply engaged with the merits of the litigation).” Id. (quoting Air Line Pilots Ass'n, Int'l v. UAL Corp., 897 F.2d 1394, 1396 (7th Cir. 1990)). According to counsel, SSAC is no longer in business. (Dkt. No. 219, ¶ 2); see also Deakins v. Monaghan, 484 U.S. 193, 200-01 (1988) (relying on representations of counsel in determining mootness). It follows that SSAC is not using any trademark held by Defendants. Defendants seek prospective relief in the form of an injunction. However, given SSAC's defunct status, the court is unable to issue relief that would “make a difference to the legal interests of the parties.” Id.

Defendants do not contest SSAC's current business status. Instead, they argue for application of the “voluntary cessation” exception to the mootness doctrine. This exception relies on the resolution of one inquiry: “[i]f there is a high likelihood of recurrence, the case should not be deemed moot; if very low, mootness ought to follow.” Adams v. Bowater Inc., 313 F.3d 611, 614 (1st Cir. 2002). In Adams, after concluding mootness turned “on future threats, not upon penance,” the First Circuit assessed the record before it, including the lack of representations by counsel, and determined it “could easily be in defendants’ interest” to reinstate the offensive conduct. Id. at 615. Here, unlike in Adams, SSAC represents not only that it will not infringe any trademark, but that it is no longer in business. Based on this assurance, the likelihood of recurrence between these same parties is negligible.¹⁵

As an alternate theory, Defendants assert entitlement to monetary damages in their trademark counterclaim. (Dkt. No. 61, ¶ 77). Trademark damages under the Lanham Act are not routinely awarded. See HipSaver Co., Inc. v. J.T. Posey Co., 497 F. Supp.2d 96, 106 (D. Mass. 2007). Defendants must demonstrate the existence of one of four specific circumstances—(1) actual harm, (2) direct competition leading to diversion of profits, (3) palming off or fraud, or (4) inequitable conduct. See Monahan Prod. LLC v. Sam's E., Inc., 463 F. Supp. 3d 128, 145-46 (D. Mass. 2020) (citing Aktiebolaget Electrolux v. Armatron Int'l, Inc., 999 F.2d 1, 5 (1st Cir. 1993)). The record demonstrates that none of these circumstances are present here. Defendants produced no evidence of actual harm. See id. at 148. The parties’ products do not directly compete such that SSAC's profits would have gone to Defendants. Rather, they were selling the same product and SSAC was paying Defendants for the product. This theory of monetary damages is thus foreclosed by the “first sale doctrine’ which ‘carves out an exception [from infringement liability] for the resale of ‘genuine goods bearing a true mark even though the sale is not authorized by the mark owner.’ ” Coty Inc. v. Cosmopolitan Cosmetics Inc., 432 F. Supp.3d 345, 350 (S.D.N.Y. 2020) (internal citations omitted) (alteration added); accord Nexxus Prod. Co. v. CVS New York, Inc., 188 F.R.D. 11, 14-15 (D. Mass. 1999) (“Trademark protection is a one trick pony—that is, trademark rights are exhausted as to a given item on the first sale of that item.”). “The underlying rationale [for the first sale doctrine] stems from the proposition that the resale of genuine products does not confuse consumers and therefore is not a concern of the Lanham Act.” Heraeus Kulzer LLC v. Omni Dental Supply, No. CIV.A. 12-11099-RGS, 2013 WL 3305284, at *3 (D. Mass. July 1, 2013). Defendants produced no evidence demonstrating SSAC was selling anything other than genuine DPI product lawfully purchased on the open market. As Defendants have no evidence supporting consumer confusion, nor have they identified an infringing product, they cannot claim money damages based on direct competition. Similarly, this is not a case of palming off inferior goods or one of fraud tied to the underlying goods. See FabriClear, LLC v. Harvest Direct, LLC, 651 F. Supp. 3d 406, 412 (D. Mass. 2023) (explaining palming off). Finally, as explained, Defendants failed to demonstrate any genuine issues of material fact with respect to any of their claims alleging inequitable conduct, so there is no basis for unjust enrichment or deterrence damages.¹⁶ Defendants therefore cannot recover monetary trademark damages as a matter of law.¹⁷ SSAC's motion for summary judgment is granted as to Counterclaim VI.

c. Violation of Mass. Gen. L. c. 93A (Counterclaim VII) and Civil Conspiracy (Counterclaim VIII)

Defendants are explicit that the only alleged wrongful acts justifying Counterclaims VII (93A) and VIII (civil conspiracy) are the purported tortious interference, fraud, and aiding and abetting discussed above. But Defendants have failed to raise a genuine issue of material fact with respect to any of these counterclaims. Consequently, they have failed to demonstrate the existence of any underlying wrongful act, an essential element for both torts. See, e.g., Branch Ave Cap., LLC v. U.S. Bank Nat. Ass'n, No. CIV.A. 12-40140-TSH, 2013 WL 5242121, at *8 (D. Mass. Sept. 16, 2013) (Chapter 93A); Boyle v. Barnstable Police Dep't, No. CIV.A. 09-11435-MBB, 2012 WL 2126868, at *10 (D. Mass. June 11, 2012) (civil conspiracy). SSAC's motion for summary judgment is therefore granted as to Counterclaims VII and VIII.

VI. CONCLUSION

For the reasons set forth above, SSAC's motion (Dkt. No. 164) is GRANTED in its entirety, and Counterclaims II-VIII are dismissed. Defendants’ motions (Dkt. Nos. 161, 165, and 171) are GRANTED with respect to Plaintiffs Sonic Solutions, LLC and AlgaeControl.US LLC, who are dismissed as parties.¹⁸ Defendants’ motions are GRANTED in part and DENIED in part with respect to Plaintiff SonicSolutions Algae Control, LLC. Specifically, the motion is granted as to Counts IV, VI, and VIII, but the motion is denied as to Counts I-III, V, and VII. Finally, Defendants’ (Dkt. No. 176) motion in limine is DENIED without prejudice.

It is So Ordered.

FOOTNOTES

1.   Defendants also filed a motion in limine to exclude the trial testimony of Dr. Craig L. Moore. (Dkt. 176). For the reasons articulated below, this motion is denied without prejudice.

2.   Generally, all record citations will follow the format of ECF No. at ECF Generated Page #, or ECF No., ¶.

3.   It is undisputed ACUS was not party to the 2012 Agreement. (Dkt. No. 208, ¶ 91).

4.   Although Sonic Solutions purports to dispute this fact, its dispute is with respect to pricing terminology not the existence of purchase orders.

5.   SSAC disputes some of these facts, but the disputes are immaterial. The court references the allegation solely to explain how the animosity between DPI and non-party Algaesonix led to SSAC and DPIs’ relationship rupturing.

6.   The USPTO issues each trademark a registration number to aid in locating it on the register. The court refers to the trademarks by registration number. See, e.g., Trader Joe's Company v. Trader Joe's United, No. 22:3-CV-05664-HDV-MARx, 2024 WL 305697, at *2 (C.D. Cal. Jan. 12, 2024) (citing to registration numbers). The court takes judicial notice of the relevant registration numbers.

7.   The court takes judicial notice of HBS's LLC formation documents.

8.   Count VIII (cancellation of trademarks) is governed by federal law.

9.   Plaintiffs do not seek summary judgment on Counterclaim I (declaratory judgment), and Counterclaim VI (trademark infringement) is governed by federal law.

10.   Although the court applies Massachusetts case law, the result is the same under Tennessee law. According to Tennessee's merger doctrine, “the last agreement concerning the same subject matter that has been signed by all parties supersedes all former agreements, and the last contract is the one that embodies the true agreement.” Magnolia Grp. v. Metro. Dev. & Hous. Agency of Nashville, Davidson Cnty., 783 S.W.2d 563, 566 (Tenn. Ct. App. 1989). “For merger to apply, the successive contracts must have the same parties, and they generally must contain inconsistent terms such that they cannot stand together as supplemental agreements.” Shree Krishna, LLC v. Broadmoor Inv. Corp., No. W2011-00514-COA-R3CV, 2012 WL 312254, at *14 (Tenn. Ct. App. Feb. 1, 2012). Like Massachusetts, Tennessee looks to the Restatement (Second) of Contracts in determining merger's application. Id.

11.   In December 2023, Federal Rule of Evidence 702 was amended to clarify “expert testimony may not be admitted unless the proponent demonstrates to the court that it is more likely than not that the proffered testimony meets the admissibility requirements set forth in the rule.” Fed. R. Evid. 702, Advisory Committee Note to 2023 Amendments. “Nothing in the amendment imposes any new, specific procedures․ Similarly, nothing in the amendment requires the court to nitpick an expert's opinion in order to reach a perfect expression of what the basis and methodology can support.” Id. As before, “once the court has found it more likely than not that the admissibility requirement has been met, any attack by the opponent will go only to the weight of the evidence.” Id. In deciding this motion, the court relied on the most recent version of Rule 702 in concluding Plaintiff's expert report is sufficiently reliable to avoid exclusion at summary judgment. See Milliman, Inc. v. Gradient A.I. Corp., No. CV 21-10865-NMG, 2023 WL 8880385, at *1 (D. Mass. Dec. 22, 2023) (“The Court will not exclude any testimony at this [summary judgment] stage unless ‘defects are obvious on the face of a proffer.’ ” (internal citation omitted)).

12.   Defendants contend Dr. Moore's February 21 and March 6, 2023 supplemental reports are untimely because, unlike the original report, they reduce damages to present value. Defendants claim this exceeds the scope of a supplemental report, and thus the documents constitute new but untimely expert report. “Ordinarily, the proper scope of a supplemental report is limited to ‘correcting inaccuracies’ or ‘filling interstices’ in an initial report.” In re Zofran (Ondansetron) Prod. Liab. Litig., No. 1:15-MD-2657-FDS, 2019 WL 5423907, at *3 (D. Mass. Oct. 23, 2019). However, “a ‘late’ expert declaration [or supplement] submitted in response to criticisms of the expert's opinion or methodology contained in a Daubert motion or motion for summary judgment is permissible as long as it is consistent with the overall opinion or methodology in the original report and merely provides additional subsidiary details, support, or elaboration.” Massachusetts Mut. Life Ins. Co. v. DB Structured Prod., Inc., No. CV 11-30039-MGM, 2015 WL 12990692, at *5 (D. Mass. Mar. 31, 2015). Here, the jury must calculate present value with or without the benefit of expert reports. See Boothby v. Texon, Inc., 608 N.E.2d 1028, 1039 (Mass. 1993); see also Franchina v. City of Providence, 881 F.3d 32, 59-60 (1st Cir. 2018) (collecting cases holding the same). Amending the report to provide this calculation serves both parties’ interests by allowing them to argue for themselves the proper discount rate. See McDonald v. Federal Lab'ys, Inc., 724 F.2d 243, 247 (1st Cir. 1984) (upholding judge crafted jury instruction suggesting discount by “reasonable rate of interest” where parties did not propose any measure of present value). Moreover, Defendants are not prejudiced by supplementation of the report. See Softub, Inc. v. Mundial, Inc., 53 F. Supp.3d 235, 266 n. 20 (D. Mass. 2014) (refusing to strike absent prejudice). They deposed Dr. Moore regarding the supplement; and the report was provided well in advance of trial.

13.   See, e.g., FAC, Dkt. No. 98, ¶¶ 76 (Norway & Czechia), 77 (Australia), 79 (Quebec), 89 (California), 109 (Middle East, Africa, and India), 121 (Uruguay), 136 (Ecuador), 138 (Philippines), 144 (Maryland), and 146 (Placer County, California).

14.   Defendants’ Counterclaim II initially alleged SSAC interfered with the potential sale of HBS products to the State of Florida. (Dkt. No. 61, ¶ 52-54). Specifically, it claimed SSAC presented false information in a presentation at Florida Gulf Coast University (“FGCU”). Defendants do not defend this theory in their summary judgment briefing. (Dkt. No. 202 at 8-13). “After filing their [counterclaims], the [Defendants] did nothing to develop this particular claim, and the summary judgment papers disclose no development of it. The claim is, therefore, waived.” Merrimon v. Unum Life Ins. Co. of Am., 758 F.3d 46, 57 (1st Cir. 2014).

15.   To the extent Defendants seek an injunction against parties not named in the suit, “a court cannot lawfully enjoin the world at large.” Dystar Corp. v. Canto, 1 F. Supp. 2d 48, 57 (D. Mass. 1997) (internal quotations omitted).

16.   In passing, Defendants argue the Lanham Act authorizes fee-shifting, and consequently the potential for recovery of attorneys’ fees means this dispute is still live. This position is unavailing; the Lanham Act authorizes prevailing parties to recover fees in “exceptional cases.” Ji v. Bose Corp., 647 F. Supp. 2d 80, 84 (D. Mass. 2009), aff'd, 626 F.3d 116 (1st Cir. 2010). An “ ‘exceptional case’ in which a prevailing plaintiff may recover attorney's fees occurs where the infringer's actions were ‘malicious, fraudulent, deliberate, or willful.’ ” Id. at 83 (quoting Venture Tape Corp. v. McGillis Glass Warehouse, 540 F.3d 56, 64 (1st Cir. 2008)). Based on the foregoing analysis, the record would not support a finding of exceptionalness. Defendants’ fraud/malice-based counterclaims all fail. Moreover, the record contains no support for a finding of deliberate or willful infringement because the “first sale” doctrine likely bars any finding of infringement. Monahan Products, 463 F.Supp.3d at 147 (“Under the first-sale doctrine, Sam's Club could have lawfully sold UPPAbaby strollers, even at a steep discount, as long as they were identical to genuine versions.”).

17.   Defendants initially asserted an alternate theory of trademark liability premised on Massachusetts common law. They have not developed this argument thereby waiving the theory. Merrimon v. Unum Life Ins. Co. of Am., 758 F.3d 46, 57 (1st Cir. 2014). Furthermore, “[b]ecause trademark infringement is defined in essentially the same terms under the Lanham Act and under Massachusetts law, [analysis of] the merits of any of the state claims will not be different enough to merit separate discussion.” Leejay v. Bed Bath & Beyond, Inc., 942 F. Supp. 699, 701 n. 2 (D. Mass. 1996) (alteration added).

18.   As noted, the court concluded Plaintiff Sonic Solutions, LLC had standing with regard to Count VI, but the court granted Defendants’ motion for summary judgment as to Count VI on the merits, resulting in dismissal of Plaintiff Sonic Solutions, LLC as a party.

MARK G. MASTROIANNI United States District Judge