112 F. Supp. 3d 83
S.D.N.Y.2015Background
- Nielsen (market-research firm) hired Success to automate weekly sales-data collection from a 1,222-store statistical sample under a General Services Agreement (GSA) and related Statement of Work (SOW); Success also had a preexisting Cooperation Agreement to provide scanned data from ~30 stores.
- The SOW contemplated recruitment from three categories (Existing Success stores, New Stores to be approved by Nielsen, and a 5,000-store Farm System) but did not unambiguously prioritize them.
- After execution, Nielsen insisted Success “exhaust” efforts to convert Original Pool and Farm System stores before using alternatives; parties disputed whether this was a material modification, and whether Nielsen owed an equitable adjustment (GSA §2.2).
- Project performance faltered (only 66 of 1,292 stores automated by Feb 2011); Nielsen scaled back Success’ role and exchanged draft amendments but no signed amendment resulted; Success terminated the GSA April 26, 2011 and suit followed.
- An anonymous Success employee (Sottile) secretly emailed Nielsen alleging data fabrication and provided a “data fabrication code”; Nielsen ran an internal audit but did not otherwise rely on Sottile’s materials; post-termination letters to stores prompted disputes about a Stipulated Injunction and alleged solicitation/poaching.
Issues
| Issue | Nielsen's Argument | Success's Argument | Held |
|---|---|---|---|
| Breach of GSA: who breached and whether Nielsen’s “exhaustion” requirement altered the contract materially | Success failed to meet the GSA’s store-recruitment targets, so Nielsen prevails on breach issues; §2.2 permits changes | Nielsen’s exhaustion demand was a material unilateral modification that increased time/costs and required an equitable adjustment | Court: SOW ambiguous; genuine fact issues preclude summary judgment for either side on breach theory tied to exhaustion; §2.2 found unenforceable as written (no methodology) so questions for jury remain |
| Damages—lost profits and limitation clause (GSA §8.1) | Limitation clause bars lost-profits recovery | Success says lost profits are general damages flowing from contract | Court: Future speculative extension profits are consequential and barred; lost profits directly tied to contract performance are general and not barred by §8.1; damages calculations remain for trial |
| Breach of Cooperation Agreement / data fabrication | Nielsen: Success manipulated/recreated data in violation of Cooperation Agreement, excusing Nielsen’s performance | Success: Recreating/filling gaps is industry practice and Nielsen knew/approved | Court: Fact issue exists whether Success breached by delivering manipulated data; summary judgment for Success denied on this claim |
| Fraud claims (both sides) | Nielsen: Success made fraudulent misrepresentations about software readiness and data integrity | Success: Nielsen induced by misrepresenting pool interest and failed to disclose Sottile info | Court: Nielsen may proceed on pre-contract misrepresentations re: software (sufficient evidence); post-contract promissory statements duplicative of contract — dismissed; Success’ fraud and fraudulent-inducement claims dismissed (damages are contract benefits only) |
| Oral amendment / waiver | Nielsen: No binding oral amendment; GSA requires written amendment (§12.6) | Success: Parties agreed orally/through emails to amend GSA | Held: No admissible evidence of a binding oral amendment; summary judgment for Nielsen on oral-amendment counterclaim |
| Implied covenant / aiding-and-abetting / Sottile-related claims | Nielsen: internal handling of Sottile tips was reasonable and did not harm Success | Success: Nielsen’s communications with Sottile and nondisclosure frustrated amendment negotiations and deprived Success of contract benefits | Court: No evidence of harm or bad faith from disclosure decisions; implied-covenant, aiding-and-abetting, and related claims dismissed |
| Tortious interference, trade defamation, CUTPA, injunction to bar state suit | Nielsen: letters to stores were permitted, did not cause contract breaches; proposed Connecticut suit would have been compulsory counterclaims; protective order should not be modified | Success: Letters violated the Stipulated Injunction and harmed its store relationships; may sue Nielsen employees in Connecticut and use discovery materials | Court: Tortious-interference and trade-defamation claims dismissed (stores’ contracts were terminable at will and no wrongful means); CUTPA claim fails if only contract claim survives; injunction denied — individual employees sued in Connecticut are not "opposing parties" for Rule 13(a); protective-order modification denied — Success may not use produced materials to relitigate claims in Connecticut after choosing not to raise them here |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard; reasonable jury inquiry)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (nonmovant must supply concrete evidence to defeat summary judgment)
- Roe v. City of Waterbury, 542 F.3d 31 (2d Cir. 2008) (genuine dispute and materiality standards at summary judgment)
- Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89 (2d Cir. 2007) (distinguishing general vs. consequential lost profits)
- Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799 (N.Y. 2014) (lost-profits analysis within contract context)
- Mount Vernon City Sch. Dist. v. Nova Cas. Co., 19 N.Y.3d 28 (N.Y. 2012) (contractual obligations cannot be altered without consent)
- Banco Nacional de Cuba v. First Nat'l City Bank of N.Y., 478 F.2d 191 (2d Cir. 1973) (when parties are "one and the same" for litigation purposes)