C.A. Acquisition Newco LLC v. DHL Express (USA), Inc.
795 F. Supp. 2d 140
D. Mass.2011Background
- C.A. Acquisition Newco LLC (successor to Cyphermint) purchased Cyphermint’s assets and obligations, including the DHL contract.
- DHL Express (USA), Inc. discontinued all domestic delivery services, effectively ending the DHL Shipping Spot project.
- The 2006 Master Services Agreement (MSA) and related SOW governed termination rights and a $50,000-per-month termination fee if DHL terminated for any reason other than Cyphermint’s material breach.
- Section 10.5 of the MSA and the SOW provided that termination fees could arise unless a material breach by Cyphermint occurred.
- DHL notified that shipping would cease on November 21, 2008; plaintiff claimed termination fees of $413,333.33 were due under the SOW.
- Plaintiff sues in Massachusetts federal court, asserting six counts including breach of contract and breach of implied covenant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract: termination and fees | DHL terminated the contract; fees due under SOW §16. | DHL did not terminate; reduced spots per §2.8, no termination. | Yes; termination fees owed to plaintiff (Count I) |
| Implied covenant breach | Defendant abused discretion by ending the project and withholding fees. | Discretion to reduce/eliminate spots precludes implied duty claim. | Denied; implied covenant survives (Count II) |
| FDUTPA claim viability | Defendant induced payment terms and breached, constituting unfair/deceptive practice. | FDUTPA applies only to consumers; not applicable here. | Denied; FDUTPA claim allowed (Count IV) |
| Breach of express warranty | DHL promised cooperation and no conflicts with plaintiff’s rights under the contract. | Allegations are vague; no explicit warranty terms identified. | Denied; claim survives (Count V) |
| Chapter 93A claim viability | Unfair/deceptive acts supporting 93A liability. | Simple breach of contract not enough for 93A. | Not dismissed at this stage; viable (Count VI) |
Key Cases Cited
- Mac's Shell Service, Inc. v. Shell Oil Prods., Co. LLC, 130 S. Ct. 1251 (S. Ct. 2010) (terminology of termination meaning end of contract)
- Burger King Corp. v. C.R. Weaver, 169 F.3d 1310 (11th Cir. 1999) (implied covenant applicable to contract performance)
- Incase Inc. v. Timex Corp., 488 F.3d 46 (1st Cir. 2007) (breach of contract vs. 93A unfair/deceptive claim)
- Kertesz v. Net Transactions, Ltd., 635 F. Supp. 2d 1339 (S.D. Fla. 2009) (consumer status under FDUTPA; remedies available to businesses)
- Bookworld Trade, Inc. v. Daughters of St. Paul, Inc., 532 F. Supp. 2d 1350 (M.D. Fla. 2007) (FDUTPA elements and consumer scope)
- Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285 (11th Cir. 2001) (implied covenant; abuse of discretion rule)