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Exec’s counterclaims in fiduciary action not a SLAPP suit

By Bernkopf Goodman on 06.28.2018
Posted In: In The News

Abuse-of-process, 93A claims sought redress for harm, judge says

The case involves a dispute between America’s Test Kitchen Inc., celebrity chef Christopher Kimball and a former advisor to ATK.

The case involves a dispute between America’s Test Kitchen Inc., celebrity chef Christopher Kimball and a former advisor to ATK.

Abuse-of-process and Chapter 93A counterclaims brought by an executive accused of aiding and abetting the former host of “America’s Test Kitchen” in misappropriating confidential information to start a competing venture did not constitute an illegal SLAPP suit, a Superior Court judge has ruled.

Defendant William Thorndike, managing director of Housatonic Partners, a Boston-based private equity firm, had served as a board member and advisor to plaintiff America’s Test Kitchen, Inc. In addition to producing the popular “America’s Test Kitchen” cooking show, the plaintiff publishes Cooks Illustrated magazine and a series of cookbooks.

After celebrity chef and ATK Chief Executive Officer Christopher Kimball left to start a new venture, “Christopher Kimball’s Milk Street,” the plaintiff accused him of breaching his fiduciary duty to the company by “ripping off” its concept and using ATK resources and confidential information to do so.

ATK later amended its claim to add Thorndike as a defendant, arguing that he actively assisted Kimball in his breach. Thorndike then brought his counterclaims. ATK responded by filing a special motion to dismiss under the anti-SLAPP law, G.L.c. 231, §59H, claiming Thorndike’s counterclaims were brought unlawfully to chill ATK’s legitimate petitioning activities.

While conceding that Thorndike’s counterclaims were brought solely in response to ATK’s petitioning activities and had no other substantial basis, Judge Kenneth W. Salinger denied the motion.

“[C]onsidering the circumstances as a whole, the Court is convinced that Thorndike’s primary purpose in asserting his counterclaims is to seek and obtain compensation for injuries caused by ATK’s alleged abuse of process and unfair trade practices,” Salinger wrote, citing the Supreme Judicial Court’s 2017 decision in Blanchard v. Steward Carney Hospital, Inc.

The four-page decision is America’s Test Kitchen Inc. v. Kimball, et al., Lawyers Weekly No. 09-060-18. The full text of the ruling can be found here.

‘Well worth studying’

Plaintiff’s attorney Jennifer B. Furey and defense counsel David C. Casey, both of Boston, declined to comment on the record.

But Boston employment attorney Dahlia C. Rudavsky, who successfully argued the Blanchard case before the SJC, said Salinger’s decision, though brief, is “well worth studying.”

In Blanchard, the SJC ruled that Rudavsky’s clients, nurses who had been terminated in the wake of an abuse scandal at a Dorchester hospital, could sue the hospital for defamation over comments its then-president had made about the firings in the media. The SJC found in that case that the nurses’ claim was not a SLAPP suit because their primary motivation was to obtain damages for harm caused by the comments, even if the suit was based on the hospital’s legitimate petitioning activity.

Salinger’s ruling “clearly elucidates the seemingly elusive distinctions between a Rule 12(b)(6) motion to dismiss and a special motion to dismiss under [the anti-SLAPP law],” Rudavsky said. “What is perhaps most interesting is that each of the analyses involves inquiry into the motivation of one of the parties — but not the same one — and each places a distinct burden on the party asserting abuse of process.”

Rudavsky was referring to the judge’s need to determine both Thorndike’s primary reason behind his abuse-of-process claim to decide if it was really a SLAPP suit, and ATK’s reasons behind its own claims against Thorndike in order to decide whether his abuse-of-process claim had sufficient merit to proceed.

David B. Mack, a business litigator in Burlington, said the anti-SLAPP law has made it tougher for defendants to bring abuse-of-process claims because any such claim is, by definition, based in part on petitioning activities. The shifting of legal fees under the anti-SLAPP law acts as a further deterrent to bringing such claims, he added.

Still, he called the ruling a “helpful application of the SJC’s very recent decision in Blanchard” in its confirmation that even if an abuse-of-process claim is based solely on petitioning activity, it can move forward if the claimant can show that his or her motivation is to redress damages caused by the petitioning activity as opposed to chilling the activity itself.

Robert W. Stetson of Boston, who has handled anti-SLAPP cases in business, real estate and employment contexts, echoed those sentiments.

“Before Blanchard, there had been a natural tension between abuse-of-process and related Chapter 93A claims and the anti-SLAPP statute,” he said. “Now we’re seeing these claims are surviving. Personally, I think that’s a good thing. Before Blanchard, parties were free to use litigation as a weapon for anti-competitive reasons and then turn around and hide behind the anti-SLAPP statute.”

But the ATK decision and others issued over the past year have made it clear that parties who abuse litigation will be held accountable in the post-Blanchard world, he said.

Stetson also said the trend he has seen in which judges use Blanchard to avoid dismissing claims on anti-SLAPP grounds shows that litigants seeking to support anti-SLAPP motions will need actual evidence that the opposing party is bringing its claim for an improper purpose.

“That can be hard at the outset of litigation,” he said. “It’s going to take work and it’ll be tough to succeed.”

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“Before Blanchard, there had been a natural tension between abuse-of-process and related Chapter 93A claims and the anti-SLAPP statute. Now we’re seeing these claims are surviving.”

— Robert W. Stetson, Boston

Celebrity theft?

Kimball co-founded ATK in 2001, hosted two of its shows, and served as its public face until 2016, when he departed to start a competing entity, “Christopher Kimball’s Milk Street.” That entity, like ATK, produces cooking shows, radio programs and a magazine, while operating a cooking school.

In October 2016, ATK sued Kimball in Suffolk Superior Court, alleging that he “literally and conceptually ripped off” ATK by misappropriating confidential information, soliciting ATK employees, and usurping ATK corporate opportunities. Those actions constituted a breach of fiduciary duty, according to the plaintiff.

A year later, ATK filed an amended complaint adding Thorndike as a defendant, alleging that he aided and abetted Kimball in his breach. Specifically, ATK alleged that Thorndike, while still advising ATK and helping manage some of its financial interests, encouraged Kimball to leave ATK at least a year before his departure, committed to investing money in Milk Street, solicited other investors, and gave Kimball strategic advice on a business plan linking Milk Street’s potential success with its ability to capture existing ATK customers.

He also allegedly advised Kimball to hire lawyers in anticipation of an ATK lawsuit.

Thorndike, who denied doing anything illegal in helping Kimball launch Milk Street, filed a counterclaim accusing ATK of abuse of process and Chapter 93A violations. The plaintiff responded with a special motion to dismiss under the anti-SLAPP law.

Legitimate motive of redress

Salinger noted that ATK had met its initial burden of showing that Thorndike’s counterclaims were based solely on its petitioning activity.

Nonetheless, he said, Thorndike’s claims did not constitute a SLAPP suit.

“[T]hey were not brought primarily to chill legitimate petitioning activities by ATK but instead were brought to seek damages for injury Thorndike suffered as a result of allegedly unlawful conduct by ATK,” the judge said, citing to Blanchard.

Specifically, Salinger said, Thorndike stated colorable claims for both abuse of process and violation of Chapter 93A, which is an important factor in showing the claims do not represent a SLAPP suit.

First, the judge said, “the assertion that ATK brought a baseless lawsuit in order to make it harder for Kimball to compete against ATK states a viable claim for abuse of process.”

Additionally, he said, Thorndike’s allegation that ATK asserted “baseless claims” against both Kimball and himself in an effort to thwart competition from the new venture states a viable claim that ATK engaged in an unfair trade practice in violation of Chapter 93A.

Accordingly, the judge concluded, the special motion should be denied.

 

America’s Test Kitchen Inc. v. Kimball, et al.

THE ISSUE: Did abuse-of-process and Chapter 93A counterclaims brought by a financial executive accused of aiding and abetting former “America’s Test Kitchen” host Christopher Kimball in misappropriating confidential information to start a competing venture constitute an illegal SLAPP suit?

DECISION: No (Suffolk Superior Court)

LAWYERS: Paul F. Beckwith, Derek Domian, Tristan J. Foley and Jennifer B. Furey, of Goulston & Storrs, Boston (plaintiff)

David C. Casey, Jennifer Margaret-Martin Duke, Christopher B. Kaczmarek and Joseph Lazazzero, of Littler Mendelson, Boston (defense)

Originally published in Massachusetts Lawyers Weekly, June 28, 2018