In a recent case, the Massachusetts Appeals Court ruled that a company could not be held liable under Chapter 93A for hiring employees from a competitor and aiding them in breaching their restrictive covenants and fiduciary duties outside of the state. The case, FTI, LLC, et al. v. Duffy, et al., involved employees of FTI Consulting who left to join Berkeley Research Group, taking clients and employees with them. FTI filed suit, alleging violations of noncompetes, restrictive covenants, and Chapter 93A against Berkeley Research Group. A jury initially awarded $30 million in damages, but the Appeals Court reversed the decision, finding that the conduct giving rise to the claim occurred primarily outside Massachusetts.
The Appeals Court emphasized that most of the alleged wrongful conduct, including meetings and recruitment efforts, took place in Washington, D.C., and New York, not in Massachusetts. This decision highlights the importance of the “center of gravity” analysis under Chapter 93A, focusing on where the wrongful conduct and its effects occurred. The ruling also raises questions about the liability of out-of-state entities for actions involving Massachusetts employees and clients, particularly when the conduct takes place predominantly outside of the state.
The decision has sparked debate among legal experts, with some arguing that the ruling sets a precedent that could allow companies to evade liability under Massachusetts law by conducting business primarily outside the state. Others believe that the court’s decision was based on a proper analysis of where the alleged wrongdoing occurred, emphasizing the need for a clear focus on the location of the conduct in Chapter 93A claims. Ultimately, the FTI, LLC, et al. v. Duffy, et al. case underscores the complexities of litigating cross-border disputes involving employee poaching and client recruitment, highlighting the need for a careful examination of the relevant facts and legal principles.
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