Huffington v. T.C. Group, LLC
2011 U.S. App. LEXIS 3746
| 1st Cir. | 2011Background
- Huffington, a Massachusetts resident, invested $20 million in a Carlyle-led fund by subscribing under a Subscription Agreement.
- The agreement included a Delaware choice-of-law clause and a forum selection clause granting exclusive jurisdiction to Delaware courts for disputes related to the agreement.
- The fund was Guernsey-based, leveraged heavily, and pledged primarily mortgage-backed securities; Carlyle representatives assured Huffington of lower risk.
- The fund defaulted in March 2008 after heavy leverage, and Carlyle proceeded to liquidation, triggering misrepresentation claims by Huffington.
- Huffington sued in Massachusetts state court for Massachusetts Blue Sky Act violations, common-law misrepresentation, and Massachusetts Chapter 93A claims; Carlyle removed to federal court.
- The district court dismissed Huffington’s claims as encompassed by the forum clause; Huffington appeals challenging coverage and enforceability of the clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the forum clause covers Huffington's claims | Huffington contends claims are pre-contract misrepresentations, not 'with respect to' the agreement | Clause is broad, encompassing any action 'with respect to' the Subscription Agreement | Yes, clause covers related claims |
| Enforceability under Bremen and public policy | Massachusetts policy against Massachusetts Blue Sky Act implications should override | Bremen factors permit enforcement absent strong countervailing public policy | Enforceable; no strong Massachusetts public policy override found |
| Adequacy of Massachusetts public policy argument for Blue Sky Act | Mass. Blue Sky Act should resist forum shift to Delaware | Blue Sky Act does not compel Massachusetts forum; action can proceed elsewhere | Not override; Massachusetts law claim not confined to Massachusetts forum |
| Effect of anti-waiver provisions in Blue Sky Act on forum clauses | Anti-waiver provision could render forum clause unenforceable | Anti-waiver does not categorically defeat enforceability of forum clauses | No categorical invalidation; enforceability remains intact |
| Impact of Delaware choice-of-law provision on Massachusetts Blue Sky Act claims | Delaware law governs interpretation; Blue Sky claim survives via narrow exception | Delaware law controls overall interpretation and enforcement; Blue Sky claim addressed under forum clause | Delaware law governs; forum clause enforced |
Key Cases Cited
- Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1966) (forum clause enforceability with four Bremen factors)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (Bremen factors and international context)
- Rivera v. Centro Médico de Turabo, Inc., 575 F.3d 10 (1st Cir. 2009) (broader scope of 'with respect to' language)
- John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070 (3d Cir. 1997) (embracing vs. narrow clause language on forum selection)
- Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285 (11th Cir. 1998) (anti-waiver provisions do not automatically void forum clauses)