Opinion
CIVIL ACTION, NO. 07-10021-DPW.
March 11, 2009
MEMORANDUM AND ORDER
Plaintiff Linguistic Systems, Inc. ("LSI") brings this action against defendant The United States Pharmacopeial Convention, Inc. ("USP"). Prior to July 2005, LSI provided foreign language translation services for USP. In April 2005, LSI made an error in a document it was translating for USP, which ultimately cost USP nearly $100,000 for reprinting expenses. Following this incident, USP and LSI entered into an agreement ("the Settlement Agreement") whereby LSI agreed to cover half the reprinting costs resulting from the error by providing USP with credits toward outstanding and future invoices. The parties also included in the Settlement Agreement a provision affirming "their mutual good faith intention to continue to work together on translation and related services projects in the future." LSI alleges USP has breached this provision by failing to continue soliciting bids from and awarding projects to LSI. Consequently, LSI brings this action with claims for: a declaratory judgment that USP is required under the Settlement Agreement to continue working with LSI in good faith (Count I); breach of contract and breach of implied and express covenants of good faith and fair dealing (Count II); and unfair and deceptive trade practices in violation of Mass. Gen. Laws ch. 93A (Count III). USP has moved for summary judgment on all three counts, contending that the disputed provision is unenforceable. For the reasons discussed below, I will grant USP's summary judgment motion on grounds that the disputed provision is too indefinite to be enforceable and there is insufficient evidence of unfair and deceptive trade practices under Chapter 93A.
I. STATEMENT OF FACTS
A. The Parties
Plaintiff LSI is a Massachusetts corporation that conducts foreign language translation and interpretation services. Defendant USP is a non-profit organization based in Maryland. USP is an official public standards-setting authority for all prescription and over-the-counter medicines, dietary supplements, and other healthcare products manufactured and sold in the United States. According to LSI, from August 4, 2004 through July 15, 2005, USP outsourced over eighty-eight percent of its translation work to LSI. The most significant project LSI undertook for USP was its agreement on August 5, 2004, to translate the United States Pharmacopeia-National Formulary ("USP-NF") into Spanish for $705,000 ("the 2004 Contract"). The USP-NF is a book of public pharmacopeial standards published by USP annually.
B. The Catalog Incident
On April 4, 2005, USP and LSI entered into a contract under which LSI agreed to provide German, French, Spanish and Chinese translations for two cover letters and an insert that would accompany the May/June 2005 USP Catalog. For a contract price of $2,170, LSI agreed to deliver to USP "fully translated, edited, formatted and proofread letters and the Insert file." The contract included a provision stating:
In no event shall LSI or its officers, directors, or agents be liable for special, indirect, incidental or consequential damages. The remedies of The Client [USP] as set forth herein and the liability of LSI with respect to the Order or anything done in connection therewith shall not in any event exceed the price of the work as reflected in the invoice for the work.
On April 26, 2005, after the catalog had been printed but before it had been mailed to USP's clients, USP discovered an error in one of the translated documents. In the German version of one of the cover letters, "USP" was incorrectly spelled as "UPS" the first time the organization's name appeared. After USP apprised LSI of the error, LSI's project manager for the catalog translation project acknowledged in an email, "This is no doubt our mistake."
On April 27, 2005, following discussions with LSI and the printing vendor, USP concluded that the only viable solution was to have the publication reprinted on an expedited basis. The same day, Susan de Mars, USP's Chief Legal Officer, sent a letter ("the Claim Letter") to Martin Roberts, President of LSI. The letter stated:
Linguistic Systems, Inc. improperly translated certain English May/June 2005 USP Catalog text into German. Specifically, we became aware that USP was transposed into UPS in the "Dear Colleague" section of the catalog, after printing was concluded.
USP hereby demands that Linguistic Systems, Inc. pay for all costs associated with reprinting, polybagging, labeling, and mailing preparation of the May/June 2005 USP Catalog. At this time, we estimate these costs to be approximately $96,000.00. As you know, time is of the essence. Your failure to promptly agree to pay the final amount will severely harm USP.
The final reprinting cost to USP amounted to $97,076.50.
C. The Settlement Agreement
On May 3, 2005, Eric Karp, a lawyer representing LSI, called Kenneth Alexander, USP Assistant General Counsel, to discuss a potential settlement in connection with the catalog incident. Karp explained LSI's belief that USP had contributed to the error and noted that the parties' agreement had included a provision limiting LSI's liability to the contract price of the catalog project. Nevertheless, Karp said, in the interest of preserving the parties' positive relationship going forward, LSI proposed to cover up to half of USP's reprinting costs ($48,538.25) by providing credits toward outstanding and future invoices. Two days later, on May 5, 2005, Alexander informed Karp that USP accepted LSI's proposal in principle.
On July 18, 2005, the parties executed the final version of the Settlement Agreement. The agreement was written as a letter from Karp to Alexander, and it read in pertinent part:
I am pleased to confirm that we have agreed to resolve the matters set forth in the letter from Susan S. de Mars, Chief Legal Officer of United States Pharmacopeia (USP) to Martin Roberts, President of Linguistic Systems, Inc. (LSI) dated April 27, 2005 (the Claim Letter).
. . .
LSI shall contribute one-half (1/2) of the cost [of reprinting] solely by issuing credits of twenty percent (20%) of the amount of the currently unpaid invoices submitted to USP and invoices for future translation work performed by LSI for any department or division of USP. . . . LSI and USP affirm their mutual good faith intention to continue to work together on translation and related services projects in the future.
The terms of the resolution set forth above shall be in complete and final settlement and satisfaction of the claims, demand and matters set forth in the Claim Letter.
During negotiations leading up to the final agreement, USP requested including a provision that if its credits were not exhausted within the next two years, LSI would have to pay the outstanding difference. LSI, in turn, had requested a provision whereby USP would "affirm[] its intent" to award LSI the contract for final proofreading services of the Spanish translation of the USP-NF, which would be performed after LSI had completed its initial translation work under the 2004 contract. Neither provision was included in the final agreement.
D. Disputes Following the Settlement Agreement
On August 11, 2005, USP informed LSI that it had awarded the contract for proofreading the Spanish translation of the USP-NF ("the 2005 Proofreading Contract") to another vendor. According to the USP employee primarily responsible for making the decision, USP preferred to have "another set of eyes" review the document, rather than to have it proofread by the same party that had performed the initial translation. Martin Roberts, President of LSI, engaged in a contentious telephone conversation with the USP employee who selected the other vendor, but Roberts later acknowledged that he respected USP's decision.
Shortly following the dispute about the 2005 Proofreading Contract, USP informed Roberts that LSI should not expect any work from USP in the foreseeable future with respect to translating the USP-NF into languages other than Spanish. In response to this news, Roberts emailed Kenneth Alexander on August 22, 2005, stating:
LSI had submitted bids to USP on December 21, 2004, to translate the USP-NF into Arabic, Chinese, and Russian. USP ultimately chose not to translate the USP-NF into either Arabic or Chinese. For the Russian translation, USP contracted with the Russian company Publishing Group Geotar-Media ("Geotar-Media"). According to USP, this bid was more attractive than LSI's bid because it was less expensive and because Geotar-Media could perform production and distribution services in Russia.
[I]t seems there is actually no basis for the [Settlement Agreement] after all since it is not possible for USP to follow up on its intention to give LSI new work in accordance with the agreement, and we'll have to declare the agreement nullified. This means we'll have to reverse the credits USP has received.
Alexander responded with a letter that stated, "USP does not agree that LSI is entitled to revoke or otherwise cancel" the Settlement Agreement. Alexander's letter continued:
USP entered into the settlement agreement in good faith and has operated in good faith. The fact that a specific contract was not awarded to LSI does not mean that LSI can . . . demand that USP reverse the credits set forth in the [Settlement Agreement]. . . .
LSI is welcome to bid on future translation projects. The decision to award a particular project to LSI, or not, will be made in good faith by USP. USP fully expects LSI to act in good faith and to continue to honor the terms of the [Settlement Agreement].
On September 27, 2005, following LSI's completion of its work under the 2004 Contract, Roberts sent a fax to William Zeruld, USP's Vice President of Publications. Roberts proposed a modification of the Settlement Agreement whereby USP's credits would be applied only to future work and not to presently outstanding invoices. Roberts argued that "LSI deserves to be paid in full for its work on the [USP-NF]," and explained that USP's good faith intention to continue working with LSI had been
the quid pro quo for LSI paying half of the reprinting cost. In fact, the agreement does not state that LSI will be given the opportunity to bid — it states that LSI and USP will continue to work together (based on previous performance and Ken Alexander (sic) statement to our attorney that "USP needs LSI" which was the driver for this offer from LSI).
In response, Zeruld directed another USP employee to call Roberts and explain USP's position that there was no quid pro quo committing USP to enter future contracts with LSI.
E. TRADOS Training Program
On November 7, 2005, USP requested LSI's services to train USP personnel to use a translation software system called TRADOS. LSI had used the TRADOS software during its work on the Spanish translation of the USP-NF. In December 2005, LSI's lead translator from that project conducted the TRADOS training for USP's employees. USP paid the full cost of the training without deducting any credits. According to LSI, the parties did not consider the training to be "translation work" that fell within the bounds of the Settlement Agreement.
F. Further Communications Between Karp and Alexander
In April 2006, the attorneys for LSI and USP who had negotiated the Settlement Agreement had further communications regarding its application. On April 6, 2006, Eric Karp emailed Kenneth Alexander, requesting a discussion regarding "the LSI/USP matter." In a follow-up email, Karp asked Alexander, "Is it the position of USP that it can reap the rewards of the agreed upon credits against LSI invoices and not ever give LSI the chance to bid on further work?" Later the same day, Alexander responded, "I am not aware of whether or not there has been the opportunity for LSI to bid on further work. However, the tone of your email suggests that USP has acted in bad faith, which I do reject."
On April 7, 2006, Karp again emailed Alexander, stating that it was his understanding "that LSI has not been given the opportunity to bid on any new work since the date of the settlement agreement." Three days later, on April 10, 2006, Alexander responded that "USP has not sought to exclude LSI from bidding on projects." Alexander explained that the contract for the Russian translation of the USP-NF was given to "a Russian organization because of the many unique issues associated with book publishing in Russia." See Note 1, supra. Alexander added that he was "not aware of any other opportunities at the present time for LSI to bid on."
G. LSI's 2006 Proofreading Bid
On May 1, 2006, Martin Roberts sent an email to his contact at USP, stating, "I'd like to get back on track with USP, which the settlement letter was designed to accomplish. . . . We haven't had a single translation inquiry since the letter was signed last July." In an internal email, Rebecca Cambronero, USP's Project Coordinator of Spanish Translation and Production, told two other USP employees that there was no translation work available for LSI because "we actually prefer to (sic) the translation ourselves," but that "I can send a proofreading bid if you think that would placate them." The following day, USP contacted LSI, inviting the company to bid on a contract to proofread the second edition of the Spanish version of the USP-NF ("the 2006 Proofreading Contract"). USP also solicited bids from seven or eight other vendors for the project.
On June 2, 2006, USP informed LSI in a letter that USP had chosen not to accept LSI's bid. USP explained that in making its decision, it had reviewed LSI's proposal, the results of a proofreading sample LSI had submitted, and the previous proofreading work done by LSI on the Spanish translation of the USP-NF. With respect to the USP-NF translation, USP claimed it had identified three types of errors that were not picked up during the initial proofreading. The letter also stated, "If other services are needed, we will consider LSI." (emphasis added). In contrast, rejection letters to other vendors who had bid read, "If other services are needed, we may consider the use of your services." (emphasis added).
USP now acknowledges that one type of error it identified was not attributable to LSI, but claims it was unaware of this at that time.
H. LSI's Annulment Proposal
On July 20, 2006, Roberts sent a letter to Susan de Mars. Roberts noted that since the Settlement Agreement, the only activity between USP and LSI relating to translation services was USP's invitation for LSI to bid on the 2006 Proofreading Contract. Roberts stated that LSI and USP had reached a "crossroads," where either "USP decides to move forward with a specific plan for using LSI's translation services, or we agree that there is actually no basis for fulfilling the terms of the Settlement Letter and mutually decide that an annulment is the best solution." Attached to Roberts's letter was a draft annulment agreement, which provided that USP would pay LSI $40,643.30 in satisfaction of the credits that had been issued thus far to USP under the Settlement Agreement.
LSI estimates that since July 15, 2005, when the Settlement Agreement was signed, USP has awarded at least 121 translation projects to various vendors, worth over $1 million.
On July 31, 2006, USP rejected the proposed annulment. Susan de Mars wrote a letter in response to Roberts, stating, "USP has amply demonstrated its 'good faith intention' to continue to work with LSI as required by the settlement letter." The letter from de Mars indicated that USP "will continue to consider using LSI for future services, but to be clear, the terms of the 2005 settlement letter do not require USP to select LSI to perform services when a lower bid, or a more responsive bid, is received from a competitor, or when services can be performed in-house." The letter concluded by asserting:
The simple fact of the matter is that USP has acted fairly and in good faith with regard to LSI, and USP's vendor selection processes have been conducted in an objective and reasonable manner. USP thus has fully satisfied its obligations under the settlement letter, and does not intend either to sign the annulment or commit itself to working with LSI.
On December 7, 2006, LSI filed this action against USP in Massachusetts state court. USP subsequently removed the action to this court on January 5, 2007, and in due course moved for summary judgment.
II. SUMMARY JUDGMENT STANDARD
"[S]ummary judgment's role is to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Wynne v. Tufts Univ. Sch. of Med., 976 F.2d 791, 794 (1st Cir. 1992). A court must grant summary judgment when it concludes based on the "the pleadings, the discovery and disclosure materials on file, and any affidavits . . . that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment must make a preliminary showing that no genuine issue of material fact exists. Nat'l Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir. 1995), cert. denied, 515 U.S. 1103 (1995). If the movant makes such a showing, then the nonmovant must point to specific facts demonstrating that there is, in fact, a trialworthy issue. Id.
III. DISCUSSION
A. Breach of Contract Claim1. Enforceability of the Disputed Provision
LSI's breach of contract claim hinges primarily on whether the following sentence in the Settlement Agreement is enforceable: "LSI and USP affirm their mutual good faith intention to continue to work together on translation and related services projects in the future." Although the Settlement Agreement does not itself specify which jurisdiction's laws should govern its interpretation, both parties have proceeded under the assumption that Massachusetts law provides the applicable rule of decision, and I see no reason to reject that conclusion. Under Massachusetts law, determining the respective rights and obligations of parties under a contract is ordinarily a question of law for a court. See Nadherny v. Roseland Prop Co., Inc., 390 F.3d 44, 48 (1st Cir. 2004).The parties offer very different interpretations of the disputed provision's intended purpose within the Settlement Agreement as a whole. According to LSI, the provision was meant to obligate USP "to continue to consider LSI in good faith when awarding translation and related projects in the future" and "to award such work to LSI in good faith whenever it was commercially reasonable to do so." Under LSI's reading of the contract, the guarantee that LSI would maintain its position as "a qualified and indeed a preferred vendor for USP" in the wake of the catalog incident was the "sole consideration" LSI received for providing USP with over $40,000 in credits.
According to USP, however, the disputed provision "was not intended by the parties to create any contractual obligations whatsoever." Instead, it was "merely intended to be a statement of both parties' desire to continue their commercial relationship into the future." Under USP's reading of the contract, the consideration LSI received under the contract was USP's agreement to relinquish any claims against LSI in connection with the catalog incident. USP contends that settling those potential claims, which USP had earlier asserted in the Claim Letter, was "the central purpose of the Agreement."
In the April 27, 2005 Claim Letter, USP "demand[ed] that Linguistic Systems, Inc. pay for all costs associated with reprinting, polybagging, labeling, and mailing preparation of the May/June 2005 USP Catalog." See section I.B, supra.
I do not find either party's interpretation of the Settlement Agreement wholly persuasive. For one thing, it is apparent from the language of the Settlement Agreement that the prospect of a continuing commercial relationship with USP was not the "sole consideration" LSI received from the contract. The agreement begins with Eric Karp's observation that "we have agreed to resolve the matters set forth in the [Claim Letter]," and it ends by noting that "[t]he terms of the resolution set forth above shall be in complete and final settlement and satisfaction of the claims, demand and matters set forth in the Claim Letter." Under Massachusetts law, a party's forbearance to press a claim is adequate consideration for a settlement agreement so long as the potential claim is not "vexatious or frivolous." Mathewson Corp. v. Allied Marine Indus., Inc., 827 F.2d 850, 856 (1st Cir. 1987). In the absence of any suggestion that USP's Claim Letter was issued in bad faith, the relinquishment of the claims asserted in the letter constituted valid consideration. This is true regardless of whether LSI ultimately agreed to pay more in the Settlement Agreement than they likely would have paid in damages based on the catalog contract's liability limitation clause. See id. at 855 (noting that a settlement decision may be based not only on a calculation of prospective costs, but also on a desire "to buy peace of mind, avert risk, eschew adverse publicity, [or] put an end to stressful and disruptive litigation.").
On the other hand, I find that the disputed provision affirming the parties' intention to continue working together was also intended by the parties to constitute consideration under the contract. This conclusion is supported by the text of the Settlement Agreement. First, the disputed provision immediately precedes the statement that " [t]he terms of the resolution set forth above shall be in complete and final settlement and satisfaction of the claims, demand and matters set forth in the Claim Letter." (emphasis added). This indicates the disputed provision was intended to be among the "terms of the resolution," in contrast with the concluding niceties that appear below the "terms of the resolution" sentence ("LSI is pleased that this matter is being resolved amicably and expeditiously and they look forward to a continuing and mutually beneficial relationship with USP."). Second, the disputed sentence comes at the end of a paragraph explaining that the credits provided to USP would be apportioned between outstanding invoices and "invoices for future translation work performed by LSI for any department or division of USP." I read this paragraph as a whole to indicate that the method of payment selected by the parties was closely intertwined with the parties' commitment to pursue future commercial endeavors together. In other words, the fact that LSI did not simply pay $48,538.25 as a lump sum — but rather divvied up the amount as discounts for ongoing and future translation projects — shows that the purpose of the agreement was not solely to settle existing claims but also to preserve the parties' ongoing commercial relationship.
I note that USP's post-Settlement Agreement statements and course of conduct also indicate that the parties' commitment to pursue future commercial endeavors together was intended to be an essential element of their contract. See 5-24 Arthur L. Corbin et al., Corbin on Contracts § 24.16 (1993) ("In the process of interpreting a contract, the court can receive great assistance from the interpreting statements made by the parties themselves or from their conduct in rendering or in receiving performance under it."). As one example, in a July 31, 2006 letter to LSI, Susan de Mars indicated that "USP has amply demonstrated its 'good faith intention' to continue to work with LSI as required by the settlement letter." (emphasis added). Because I find the Settlement Agreement indicates by its own terms that the disputed provision was intended as part of the binding agreement, I need not consider the extent to which it is proper or necessary to consider this extrinsic evidence. Furthermore, as discussed below, I find the disputed provision is unenforceable in any event on grounds of indefiniteness.
Nevertheless, I find that the disputed provision is unenforceable on grounds that it is too indefinite to be amenable to judicial relief. See Armstrong v. Rohm Haas Co., 349 F. Supp. 2d 71, 79 (D. Mass. 2004) ("[D]efendant's alleged promise is too vague for this Court to ascertain a reasonably certain basis for providing an appropriate remedy."). Under Massachusetts law, "a contract's essential terms must be 'sufficiently definite so that the nature and extent of the obligations of the parties' are ascertainable." Mass. Cash Register, Inc. v. Comtrex Sys. Corp., 901 F. Supp. 404, 417 (D. Mass. 1995) ( quoting Simons v. American Dry Ginger Ale Co., 335 Mass. 521, 523 (1957)). In some circumstances, a court may be able to supply a missing term "which is reasonable in the circumstances" if doing so is "essential to a determination of [the parties'] rights and duties" under the contract. Fay, Spofford Thorndike, Inc. v. Mass. Port Auth., 7 Mass. App. Ct. 336, 342 (1979). A court's ability to fill such gaps in a contract, however, is limited. If the court "cannot supply the missing terms without writing a contract for the parties which they themselves did not make," then the agreement itself is unenforceable. Armstrong, 349 F. Supp. 2d at 80 (internal quotation omitted). See also Caggiano v. Marchegiano, 327 Mass. 574, 580 (1951) (acknowledging that while Massachusetts courts are reluctant to hold a contract unenforceable for vagueness, it is necessary where indefiniteness "reach[es] the point where construction becomes futile.") (internal quotation omitted).
Although I have concluded that the disputed provision was intended to be part of the parties' binding agreement, I find I am unable to ascertain the nature and extent of the parties' obligations with respect to their "good faith intention to continue to work together on translation and related services projects in the future." The language of the provision does not address with meaningful specificity any aspects of the future business relationship intended by the parties. Are there circumstances, for example, under which USP must invite LSI to bid on a particular project? Are there circumstances under which USP must accept LSI's bid for that project? Is there some minimum number of projects that USP must award to LSI within a particular period of time? And for how long must the parties continue their efforts to work together?
LSI argues that the specific obligations subsumed within the phrase "good faith intention to continue to work together" were not "essential terms" to the agreement, because the parties were merely obligated to preserve their ongoing course of dealing in good faith. While it is true that a prior course of dealing between parties may in some cases serve to supplement the terms of an agreement — see Restatement (Second) of Contracts § 203(b) (1981) — there is no basis in this case on which to determine the appropriate frame of reference. LSI notes that from August 4, 2004 through July 15, 2005, USP awarded over eighty-eight percent of its translation work to LSI, but there is no clear reason why I should rely on that time frame as opposed to any other. This is particularly true where LSI was engaged during that period on the Spanish translation of the USP-NF, a multi-year project which both parties acknowledge was "Herculean" in scope. Why should the parties' efforts "to continue to work together" be measured only by reference to the most recent project they conducted together, where that project appears to have been uniquely large in scale? On this question, the provision provides no guidance.
Nor does USP's subsequent course of performance offer any assistance in deciphering the nature of the parties' obligations. LSI claims that after the Settlement Agreement was signed, USP employees made numerous statements that "ratified" their obligations under the contract. See, e.g., Note 6, supra. None of these statements, however, provide any insight into the specific scope of USP's contractual duties. Cf. Cont'l Bank Trust Co. v. American Bonding Co., 605 F.2d 1049, 1052 (8th Cir. 1979) (explaining that "indefiniteness can be cured by the subsequent conduct of the parties"). At most, the statements cited by LSI show USP believed it had some form of obligation to demonstrate "good faith" in its future interactions with LSI. Such a broadly characterized requirement is hardly sufficient to define the parameters of the parties' respective duties in any meaningful fashion.
LSI further suggests the parties had "no need to articulate a specific duration for their obligations" because "their mutual good faith performance of those obligations necessarily would preserve the continuing business relationship for so long as it continued to benefit both parties." This observation also provides no aid in identifying any enforceable obligations. As a practical matter, USP's decision to stop soliciting work from LSI presumably was based on the conclusion that it was no longer beneficial for the company to do so, whether for economic reasons or otherwise. LSI acknowledges that USP did not have "an obligation to award LSI any particular translation or related service project," but claims that USP was required to award work to LSI "whenever it was commercially reasonable to do so." Even if such a broadly defined standard could be implemented in practice, I find it impossible to discern such a heavy obligation from what the provision describes merely as a "good faith intention to continue to work together."
There are many ways in which contracting parties can define one another's future commercial obligations concretely, even in the absence of committing to specific projects. USP could have agreed, for example, to provide LSI with a minimum amount of translation work over the next five years, whether measured by a percentage of USP's outsourced work, a dollar figure, or a certain number of projects. The parties could also have identified some form of compensation that USP would be required to provide LSI if the work they awarded to LSI fell short of the quota identified in the contract. Morever, even if the parties desired an arrangement with more flexibility, they could have at least indicated some set of broadly defined standards that USP would need to consider when deciding whether to award a particular project to LSI. In short, the ability of parties to shape the contours of their commercial arrangements in an enforceable fashion is almost limitless.
In the absence of any one essential contract term — e.g., price, duration, quantity, or quality of service — I could endeavor to supply a term "reasonable in the circumstances" that would aim to capture the parties' intention. But even if a single missing material term would not necessarily make the contract unenforceable, I find that the absence of any material term clearly does. See Armstrong, 349 F. Supp. 2d at 80 ("[T]he law provides a variety of mechanisms to fill in missing contractual details where appropriate to effectuate the intent of the parties to make a binding agreement. Taken together, however, the omissions are fatal."). If I sought under these circumstances to supply "reasonable terms" for every absent element of the contract, I would simply be "writing a contract for the parties which they themselves did not make." Id. (quoting Held v. Zamparelli, 13 Mass. App. Ct. 957, 958 (1982)). I therefore find the disputed provision too indefinite to be enforceable.
I do not separately address USP's argument that the disputed provision is unenforceable as a "mere expression of present intention." I find in this context that USP's argument concerning the "open-ended" nature of the provision's language is effectively a subset of the argument for indefiniteness.
2. Severability of the Disputed Provision
At my request, the parties briefed the issue of whether the disputed provision — if found to be unenforceable — is severable from the remainder of the Settlement Agreement. Under Massachusetts law, "it is well settled that if the part of a contract . . . which is valid, can be separated from that which is void, and carried into effect, it may be done." Cadillac Auto. Co. v. Engeian, 339 Mass. 26, 30 (1959) (internal quotation omitted). As explained in American Surety Co. v. Rosenthal, 133 N.Y.S.2d 870 (N.Y.Sup.Ct. 1954):
[T]he essential test to determine whether a contract is entire or severable and divisible, it has been said, is simple. "It can be nothing else than the answer to an inquiry whether the parties assented to all the promises as a single whole, so that there would have been no bargain whatever, if any promise or set of promises was struck out. . . . The question essentially is one of fact: Did the parties give a single assent to the whole transaction or did they assent separately to several things?"Id. at 874 (quoting 3 Samuel Williston et al., Williston on Contracts § 863 (rev. ed. 1936)).
I am convinced that the Settlement Agreement in this case was intended by the parties as a single interrelated transaction, and I therefore find that severing the disputed provision would not be possible. As noted above, the consideration LSI received in exchange for providing credits to USP included both the release from claims in connection with the catalog incident and also the parties' mutual commitment to continue working together. There is simply no basis in the Settlement Agreement or in the record for distinguishing between which credits were given in return for which form of consideration. I find that the Settlement Agreement constituted a single undertaking, and because an integral element of that undertaking is unenforceable, the contract as a whole must be unenforceable as well.
I recognize therefore that granting summary judgment to USP on the motion before me does not fully resolve the dispute between the parties. LSI's claim for breach of contract must fail because the disputed provision is unenforceable. Because the Settlement Agreement as a whole is also unenforceable, however, I would likely — if the issue were properly before me — find it appropriate to provide restitution to LSI for the credits already given to USP under the agreement, plus pre-judgment interest from the date the credits were extended. See Restatement of Restitution § 47 cmt. b (1937) ("[I]f a person transfers things to another in the belief that he has a valid contract with him, he is entitled to restitution if there is no contract."); see also Restatement (Third) of Restitution Unjust Enrichment § 31(1) (Tentative Draft No. 3, 2004) ("[A] person who renders performance under an agreement that is unenforceable by the claimant (notwithstanding such performance) by reason of (a) indefiniteness . . . has a claim in restitution against the recipient as necessary to prevent unjust enrichment."). In the present posture of this case, however, I decline to take further action in that regard.
I further note that in the absence of an enforceable Settlement Agreement, the question remains open as to what damages, if any, USP could potentially recover from LSI in connection with the April 2005 catalog incident. Presuming the amount to be equal to the contractual damage limitation in the parties' agreement for the catalog project, I would likely subtract that amount from any restitution awarded to LSI.
B. Chapter 93A Claim
LSI alleges that USP violated Mass. Gen. Laws ch. 93A, § 11, when it "deliberately and willfully misrepresented to LSI it would consider LSI in good faith when awarding and assigning translation and related service projects in the future." According to LSI, USP never had any intention of honoring its promise to continue working together. LSI argues that even if the Settlement Agreement is itself unenforceable, USP's deceptive and unfair conduct entitles LSI to recover not only USP's unwarranted benefits from the agreement (i.e., restitution of the $40,643.30 in credits), but also treble damages and an award of legal fees.
Chapter 93A imposes on any person who deals in trade or commerce an obligation not to engage in any "unfair or deceptive acts or practices." See Zapatha v. Dairy Mart, Inc., 381 Mass. 284, 299 (1980) ( citing Mass. Gen. Laws ch. 93A, §§ 2, 11). The statute itself does not define what constitutes an unfair or deceptive act, and the Massachusetts Supreme Judicial Court has observed that "[t]he relief available under c. 93A is sui generis. It is neither wholly tortious nor wholly contractual in nature, and is not subject to the traditional limitations of preexisting causes of action." Kattar v. Demoulas, 433 Mass. 1, 12 (2000) (internal quotation omitted). For this reason, "[l]egality of underlying conduct is not necessarily a defense to a claim under c. 93A," see id. at 13, and "[a] party is not exonerated from chapter 93A liability because there has been no breach of contract." NASCO, Inc. v. Public Storage, Inc., 127 F.3d 148, 152 (1st Cir. 1997).
The Supreme Judicial Court has explained that "[s]uch a definition would be impossible, because . . . there is no limit to human inventiveness in this field." Kattar v. Demoulas, 433 Mass. 1, 13 (2000) (internal quotation omitted).
The boundaries of what conduct qualifies as a Chapter 93A violation is a question of law. See Incase Inc. v. Timex Corp., 488 F.3d 46, 56-57 (1st Cir. 2007) (citing, inter alia, R.W. Granger Sons, Inc. v. J S Insulation, Inc., 435 Mass. 66, 71 (2001)). The Supreme Judicial Court has explained that as a general matter "[c]onduct may violate § 11 if it is within at least the penumbra of some common-law, statutory or other established concept of unfairness . . . [or] is immoral, unethical, oppressive, or unscrupulous." Mass. Farm Bureau Fed'n, Inc. v. Blue Cross of Mass., Inc., 403 Mass. 722, 729 (1989) (internal quotations omitted). The statute, however, "does not contemplate an overly precious standard of ethical or moral behavior. It is the standard of the commercial market place." Shepard's Pharmacy, Inc. v. Stop Shop Cos. Inc., 37 Mass. App. Ct. 516, 520 (1994) (internal quotation omitted).
The First Circuit remarked in NASCO, Inc. v. Public Storage, Inc., 127 F.3d 148 (1st Cir. 1997), that "[w]hile the rubric of 'rascality' as the test of whether something is 'unfair or deceptive' has been oft-recited, both the Supreme Judicial Court and [the First Circuit] have noted that such rhetoric is 'uninstructive.'" Id. at 152 (citations omitted).
In this case, I find that USP's conduct did not descend to the level of "unfair or deceptive practices" within the meaning of Chapter 93A. As discussed in greater detail above — see section III.A.1, supra — the promise USP made in an allegedly deliberate attempt to mislead LSI (i.e., USP's asserted "good faith intention to continue to work together" on future projects) was so indefinite that it is impossible to ascertain the nature and extent of the obligations to which USP intended to bind itself. I find the evidence insufficient to show that USP intentionally failed to honor its ill-defined obligations, if indeed it failed to honor them.
LSI has produced a variety of evidence that arguably demonstrates: (1) USP believed it had some form of obligation under the Settlement Agreement to consider LSI for future work; and (2) USP made very little effort actually to pursue any particular future project with LSI. It is uncontested that USP invited LSI to bid on only a single translation project in the year and a half following the Settlement Agreement — and even then, an internal USP email questioned whether that bid opportunity would be sufficient to "placate" LSI. It is also true that USP rejected LSI's bid for the 2006 Proofreading Contract under standards that LSI argues were inconsistently applied in comparison with other bidding vendors.
The most direct example is Susan de Mars's July 31, 2006 letter asserting that "USP has amply demonstrated its 'good faith intention' to continue to work with LSI as required by the settlement letter." (emphasis added). See also Note 6, supra. Several other communications from USP during the relevant time period also strongly suggest USP believed it had some form of obligation to consider LSI, including the 2006 Proofreading Contract rejection letter, which read: "If other services are needed, we will consider LSI." (emphasis added).
On the other hand, during the same time period, USP continued to work with LSI on the remainder of the multi-year USP-NF Spanish translation project. USP also separately contracted with LSI to conduct employee training for the TRADOS software system. When LSI directly requested an opportunity to bid on a translation project, USP granted that opportunity for the 2006 Proofreading Contract. USP later provided specific business reasons (albeit unsatisfactory to LSI) for its decision to ultimately select another vendor for that project.
Viewing this evidence in the light most favorable to LSI, I find it reasonable to infer that during this period USP no longer wished to continue working with LSI in any substantial capacity. Nevertheless, I cannot conclude that its conduct constituted a Chapter 93A violation. During negotiations for the Settlement Agreement, LSI attempted to include a provision that would require USP to award them a particular proofreading project, but USP refused to commit to anything so precise. The language the parties ultimately agreed upon concerning their "intention to continue working together" was so vague as to be susceptible to an enormous range of interpretations. In the context of a competitive commercial marketplace, it was not "unfair" or "deceptive" for USP to interpret this indefinite and open-ended contractual language as imposing only modest obligations. Nor was it "unfair" or "deceptive" for USP to attempt to meet those obligations with a bare minimum of conduct.
Nothing in this case suggests USP was responsible for the sort of otherwise lawful conduct the Supreme Judicial Court found "unfair or deceptive" in Kattar v. Demoulas, where the defendant exercised his right to foreclose on plaintiff's property in direct retribution for the plaintiff's refusal to testify on his behalf in an unrelated manner. 433 Mass at 14. Nor does USP's conduct reach the level of culpability held necessary for a § 11 claim in cases involving enforceable contractual agreements, where courts have held that "[a] mere breach of contract does not constitute an unfair or deceptive trade practice under 93A unless it rises to the level of 'commercial extortion' or a similar degree of culpable conduct." Commercial Union Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir. 2000) (citations omitted). See also Atkinson v. Rosenthal, 33 Mass. App. Ct. 219, 226 (1992) (explaining that a contract breach will form the basis of a Chapter 93A claim only where "the breach of contract has an extortionate quality that gives the rancid flavor of unfairness.").
For these reasons, I find no genuine issue of material fact as to whether USP's conduct was "unfair" or "deceptive" within the meaning of Chapter 93A, and I will grant USP's motion for summary judgment with respect to this claim.
I note that LSI has also filed a motion to compel the production of notes taken by Kenneth Alexander, USP Assistant General Counsel, in connection with conversations Alexander had with LSI representatives during Settlement Agreement negotiations. LSI contends these documents "bear directly on the nature and extent of the parties' obligations under the Settlement Agreement." USP acknowledges that Alexander recorded in internal emails at least part of his conversations with Eric Karp, but argues that these emails are protected by attorney-client privilege.
I have, as described above, already concluded from the text of the Settlement Agreement that the parties intended the provision affirming their "good faith intention to continue to work together" to be a binding part of their agreement. I have also concluded from the evidence already in the record that USP believed it had some form of obligation to continue considering LSI for future translation projects in good faith. Alexander's notes of his conversations with Karp would be inadmissible evidence as to the material terms of the parties' agreement, and there is no basis for inferring that they would disclose some particular wrongful conduct by USP. Consequently, I have found their production is unnecessary for my resolution of the motion before me. I will therefore deny LSI's motion to compel as moot.
IV. CONCLUSION
For reasons set forth more fully above, I DENY LSI's motion to compel, and I GRANT USP's motion for summary judgment.