Moxie Apparel, Inc. v. Lakhani
1:24-cv-12711
D. Mass.May 19, 2025Background:
- Moxie Apparel, Inc. ("Moxie") sells medical scrubs and entered both an investment and supply relationship with Sidharth Lakhani (as individual investor/board member) and his former company Krazy Kat Sportswear, LLC.
- A Manufacturing and Supply Agreement (MSA) governed the supply of inventory between Moxie and Krazy Kat, and a set of Note Agreements gave Lakhani board rights and veto power over new investment in Moxie.
- Lakhani later became an employee and major shareholder of Careismatic Brands, a competitor which acquired Krazy Kat, while retaining influence at Moxie.
- Moxie alleges that Lakhani, leveraging his positions with both companies, imposed harmful business terms, blocked inventory access, and prevented capital raising, causing severe financial harm to Moxie.
- Moxie brought claims in Massachusetts for breach of fiduciary duty, unfair competition, and tortious interference, among others; Lakhani moved to dismiss citing a forum selection clause in the MSA requiring disputes to be litigated in New Jersey.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether forum selection clause | Clause applies only to contractual claims under MSA | Clause is mandatory and covers all related claims | Clause is mandatory but does NOT cover |
| in MSA bars Moxie's claims | and not to fiduciary/tort claims against Lakhani as individual | since the facts arise from the same business arrangement | these claims; Moxie can sue in MA |
| Scope of "arising out of" language | Claims are based on tort and statutory rights, not on MSA itself | All claims are effectively based on the existence of MSA | Tort/statutory claims fall outside scope |
| of forum selection clause | |||
| Whether claims are against a party | Lakhani not a party to the MSA in his individual capacity | Lakhani signed MSA for Krazy Kat; forum clause should apply | Lakhani as individual not covered |
| covered by clause | by MSA forum selection clause | ||
| Applicability to non-contract claims | Claims are actionable regardless of the MSA's forum clause | Any claim connected to MSA must go to NJ per the clause | Claims may proceed in Massachusetts |
Key Cases Cited
- Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10 (1st Cir. 2009) (setting standards for evaluating forum selection clause enforceability and scope)
- Nisselson v. Lernout, 469 F.3d 143 (1st Cir. 2006) (standard for reviewing motions to dismiss for failure to state a claim)
- Silva v. Encyclopedia Britannica Inc., 239 F.3d 385 (1st Cir. 2001) ("must" in forum selection clause creates exclusivity)
- Huffington v. T.C. Grp., LLC, 637 F.3d 18 (1st Cir. 2011) ("relating to" is broader than "arising out of" in adjudicating scope of forum selection clauses)