Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Mass.: Consumer Protection Act claim in connection with contract breach allowed to proceed, (Nov 6, 2014)

By Edward L. Puzzo, J.D.

In a dispute between a lighting products marketer and a lighting technology developer involving claims of Massachusetts Consumer Protection Act violations, the developer had produced enough evidence of disputed facts as to whether a contract existed between the parties to survive the marketer’s motion for summary judgment, the federal district court in Boston has ruled (Performance Indicator, LLC v. Once Innovations, Inc., November 4, 2014, Woodlock, D.).

In 2011, Once Innovations, a marketer of light-emitting diode (LED) lighting products, contacted Performance Indicator to discuss a potential collaboration. Performance Indicator had developed an electromagnetic lighting technology that Once Innovations proposed to license for its lighting products. Discussions under a non-disclosure agreement continued from April 2011 through at least May 2012, during which time prototypes were produced.

The parties disagree as to whether they ever reached an agreement, but the result was that Once Innovations never paid Performance Indicator for goods and services, and Performance Indicator never delivered to Once Innovations prototypes it had produced. This resulted in litigation, wherein Performance Indicator alleged, among other claims, that Once Innovations had violated the Massachusetts Consumer Protection Act (Massachusetts General Laws Chapter 93A). At this juncture, the issue before the court was Once Innovations’ motion for partial summary judgment on Performance Indicator’s Consumer Protection Act violation claims.

Consumer Protection Act. The state consumer protection act (Chapter 93A), the court explained, prohibited unfair or deceptive acts in the conduct of trade or commerce. Breach of contract alone was normally insufficient to violate Chapter 93A, but a contract dispute may turn into a Chapter 93A violation if a contract violation occurred in combination with another bad act “within the penumbra of some common-law, statutory or other established concept of fairness” such as a party withholding payment.

Here, the court continued, there was a factual dispute as to whether a contract existed between the parties. Once Innovations noted there was no signed contract, but Performance Indicator argued that an oral agreement had been reached between the parties by telephone. There was also a factual dispute as to whether Performance Indicator unreasonably produced prototypes based on an e-mail exchange, as Once Innovations argued, or that Once Innovations induced Performance Indicator to produce prototypes without the intention to compensate them, as Performance Indicator argued.

These factual disputes about the content and significance of the communications between the parties may result in a finding of Chapter 93A violations once tested and evaluated at trial, the court stated. At this point, sufficient evidence of these disputed facts has been produced by Performance Indicator to survive summary judgment. Therefore, Once Innovations’ motion for summary judgment on the Chapter 93A violations issue must be denied, the court ruled.

The case is Civil Action No. 12-CV-12230-DPW.

Attorneys: Joseph F. Hardcastle (Hardcastle & Shober) for Performance Indicator, LLC. Philip M. Giordano (Reed & Giordano, PA) for Once Innovations, Inc.

Companies: Performance Indicator, LLC; Once Innovations, Inc.

Cases: StateUnfairTradePractices MassachusettsNews