780 F.3d 429
1st Cir.2015Background
- ADI obtained a $23 million New York judgment against Biolitec, Inc. (BI) and sued BI's CEO Wolfgang Neuberger and parent companies Biomed and Biolitec AG (BAG) in Massachusetts, alleging fraudulent transfers, tortious interference, Chapter 93A violations, and veil-piercing to collect that judgment.
- ADI alleged defendants looted BI (moving over $18M) to render it judgment-proof; complaint amended March 26, 2010.
- Defendants repeatedly refused discovery: withheld court-ordered documents, obstructed depositions (including Neuberger), and violated a district-court injunction against a cross-border merger.
- The district court found repeated, deliberate discovery violations and contempt for the injunction, warned defendants default was possible, and ultimately entered default judgment as a Rule 37 sanction.
- The district court awarded roughly $75 million (trebled Chapter 93A damages plus interest and fees) without an evidentiary hearing, relying on the prior New York judgment and statutory calculations.
Issues
| Issue | ADI's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Personal jurisdiction over BAG and Biomed | Imputable contacts from BI’s Massachusetts activities and defendants’ fraudulent transfers into forum; jurisdiction appropriate | Court must analyze each foreign defendant’s contacts independently post-Goodyear/Daimler; jurisdiction lacking | Jurisdiction established; plaintiff made prima facie showing based on forum-related misconduct and prior appellate findings |
| Sufficiency of pleadings (veil-piercing, MUFTA, tortious interference) | Complaint adequately alleged pervasive control, fraudulent transfers, and interference rendering BI judgment-proof | Claims fail to state causes of action | Claims sufficient; law of the case and prior panel decision foreclose relitigation |
| Entry of default judgment as Rule 37 sanction | Severe, repeated discovery abuses justified default to penalize and deter; lesser sanctions inadequate | Default is drastic and abused discretion | No abuse of discretion; district court considered factors, provided notice, and found willful, repeated misconduct |
| Damages awarded without evidentiary hearing | Court may compute damages from existing judgment, statutory trebling, and interest without hearing | Denial of hearing was abuse of discretion | No abuse; Rule 55 permits hearings but does not require them where amount can be computed from records (sum certain/arithmetical calculation) |
Key Cases Cited
- AngioDynamics, Inc. v. Biolitec AG, 711 F.3d 248 (1st Cir. 2013) (prior panel addressed likelihood of success on veil-piercing and MUFTA claims)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (Sup. Ct. 2011) (forum contacts and scope of general jurisdiction)
- Daimler AG v. Bauman, 134 S. Ct. 746 (Sup. Ct. 2014) (limits on general jurisdiction and the "at home" standard)
- Remexcel Managerial Consultants, Inc. v. Arlequin, 583 F.3d 45 (1st Cir. 2009) (law-of-the-case doctrine bars relitigation of issues decided earlier in same case)
- Companion Health Servs., Inc. v. Kurtz, 675 F.3d 75 (1st Cir. 2012) (sanctions under Rule 37 may punish and deter discovery abuses)
- KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1 (1st Cir. 2003) (default judgment damages may be entered without hearing when amount is readily ascertainable)
- HMG Prop. Investors, Inc. v. Parque Indus. Rio Canas, Inc., 847 F.2d 908 (1st Cir. 1988) (review of district court's decision not to hold a damages hearing is for abuse of discretion)