Oliver Wyman, Inc. v. Eielson
1:15-cv-05305
S.D.N.Y.Sep 22, 2016Background
- Oliver Wyman (NY principal place) agreed in Oct 2014 to buy OCC Boston for up to $16.5M; agreements included an Asset Purchase Agreement (APA), Employment Agreement (EA), and Non-Solicitation Agreement (NSA). Defendants Eielson and Adam were OCC Boston partners who joined Oliver Wyman as employees/partners.
- Blind profile and confidential memorandum (Mar–Apr 2014) emphasized OCC Boston’s client relationships and represented that partners intended to remain; Oliver Wyman says those representations induced the acquisition.
- EA required defendants to “devote substantially all” professional time to Oliver Wyman but allowed resignation (with/without Good Reason) and set retention/deferral payment mechanics in case of early departure. NSA/APA contained non-solicitation/non-compete covenants.
- In April–May 2015 both defendants resigned and left Oliver Wyman; Oliver Wyman alleges defendants planned and coordinated exits to cash out and thus committed fraud, fraudulent inducement, breached agreements, fiduciary duties, tortiously interfered, breached implied covenant, unjust enrichment, and violated Mass. Gen. Laws ch. 93A.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6); the court applied New York law to contract and most tort claims (but Massachusetts law to a statutory claim tied to Mass. law), and evaluated sufficiency (including Rule 9(b) for fraud).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraud / Fraudulent inducement (sufficiency under Rule 9(b)) | Defendants misrepresented intent to stay and gave financial projections; Oliver Wyman reasonably relied and suffered damage. | Promises to stay were contract-related, not collateral; agreements expressly allowed resignation and provided remedies; reliance unreasonable. | Dismissed: fraud/fraudulent inducement claims fail—promises were contract-related, not collateral misrepresentations, and justifiable reliance is lacking. |
| Breach of Non-Solicitation Agreement (APA/NSA) | Defendants coordinated resignations and endeavored to cause each other to leave, violating non-solicitation covenants. | Provision aims to prevent poaching to join competitors; plaintiffs’ allegations concern coordinated resignation, not solicitation of others. | Denied dismissal as to NSA: plausible breach because NSA prohibits endeavors to cause employees with whom defendants "came into contact for purpose of providing Consulting Services" to leave. |
| Breach of Employment Agreement | Defendants failed to devote substantially all professional time and underperformed; EA remedies not exhausted or inapplicable. | EA permits resignation and contains notice-and-cure; plaintiff did not provide required notice; termination of claim for failure to satisfy condition precedent. | Claim survives: factual issues (reasonableness, promptness, cure futility) preclude dismissal at this stage. |
| Fiduciary duty / Aiding & abetting / Tortious interference / Implied covenant / Unjust enrichment / Chapter 93A | Defendants breached fiduciary duties and engaged in torts and statutory unfair practices by intentional concealment and coordinated exit. | These claims duplicate breached-contract allegations or are governed by other law; Chapter 93A inapplicable because center of gravity is New York. | Dismissed in large part: fiduciary/aid-and-abet and tortious-interference/prospective business claims dismissed as duplicative of contract claims; implied covenant and unjust enrichment dismissed for same reasons; Chapter 93A dismissed because conduct and plaintiff's injury center in NY, not Massachusetts. |
Key Cases Cited
- Curley v. AMR Corp., 153 F.3d 5 (2d Cir.) (New York choice-of-law rules and analysis for diversity cases)
- Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155 (2d Cir. 2012) (conflict-of-law principles regarding torts attributable to plaintiff’s residence)
- Licci v. Lebanese Canadian Bank, SAL, 739 F.3d 45 (2d Cir. 2013) (flexible approach to choice-of-law for torts; locus of injury analysis)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards; legal conclusions not accepted as true)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for surviving dismissal)
- Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (fraud allegations tied to contract may be insufficient)
- Welsbach Elec. Corp. v. MasTec N. Am., Inc., 7 N.Y.3d 624 (N.Y. 2006) (contract construction and damages principles)