Public Policy Voids Indemnification Clause

In Crown v. Kobrick Offshore Fund, Ltd., 85 Mass. App. Ct. 214 (2014), a stock subscription agreement contained an indemnification clause in favor of the issuer. The defendant/ issuer prevailed on a securities fraud claim, and sought recovery of its legal fees in a counterclaim alleging this in- demnification clause. The Appeals Court rejected the issuer’s claim even while acknowledging that the issue was one of “uncertainty in Massachusetts, given the dearth of ap- pellate guidance on this issue.” After examining Federal and Massachusetts cases, it concluded that Massachusetts public policy aligns with the public policy of the Federal Securities Act as set forth by those federal district courts that have refused to enforce such indemnification provisions.

Litigating the Merits Causes Forfeiture of Personal Jurisdiction Defense Set Forth in Answer

In American Int’l Ins. Co. v. Seuffer, 468 Mass. 109 (2014), the SJC held that a defendant can forfeit a personal jurisdic- tion defense raised in its answer, by actively participating in a merits defense. Acknowledging that “Massachusetts case law had not squarely addressed the point,” the SJC nonethe- less concluded that “the weight of precedent fairly put [de- fendant] on notice that merely asserting the jurisdictional defense in its answer, without more, might be insufficient to preserve the defense.” Whether forfeiture has occurred is “fact-sensitive” and several factors “could be relevant:”

  • the amount of time that has elapsed;
  • the changed procedural posture of the case;
  • the extent of discovery on the merits; and
  • the active engagement of defendant in pretrial litigation activities.

Chapter 93A Permits the Recovery of Legal Fees for In-House Counsel’s Work

In Holland v. Jachmann, 85 Mass. App. Ct. 292 (2014), the Appeals Court concluded that the trial court has discretion under G.L. c. 93A to award attorneys’ fees for legal work performed by in-house counsel. In this case of first impres- sion, the Court noted that the General Counsel “actively participated at all stages of this matter as lead counsel.” The Court noted by contrast the case of Arthur D. Little Intl., Inc. v. Dooyang Corp., 995 F.Supp. 217, 225 (D.Mass.1998), where there was no fee award for in-house counsel who “was merely the client,” with little participation in the trial proceedings.

Employer May be Liable if It Negligently Allows Quid Pro Quo Sexual Discrimination by a Non- Supervisory Co-worker to Result in Wrongful Discharge

In Velázquez-Pérez  v.  Developers  Diversified  Realty  Corp., No. 12-2226 (1st Cir. May 23, 2014), the 1st U.S. Circuit Court of Appeals broke new ground as to employer liability under Title VII for sexual discrimination in the workplace. The Court expanded quid pro quo sexual discrimination beyond a supervisory relationship; it also concluded that an employer’s negligence in permitting such discrimination to cause a wrongful discharge may render the employer liable.

Thus, in the 1st Circuit at least, an employer can be liable under Title VII if (1) the employee’s co-worker makes state- ments maligning the employee for discriminatory reasons and with the intent to cause his firing; (2) the co-worker’s discriminatory acts proximately cause the employee to be fired; and (3) the employer acts negligently by allowing the co-worker’s acts to achieve their desired effect even though it knows (or reasonably should know) of the discriminatory motivation.