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Ksa Electronics, Inc. v. M/A-Com Technology Solutions, Inc.

United States District Court, D. Massachusetts

July 17, 2015

KSA ELECTRONICS, INC., Plaintiff,
v.
M/A-COM TECHNOLOGY SOLUTIONS, INC., Defendant.

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS

F. DENNIS SAYLOR, IV, District Judge.

This is a contract dispute between an independent sales representative and a microchip manufacturer. Jurisdiction is based on diversity of citizenship. Plaintiff KSA Electronics has brought suit against defendant M/A-Com Technology Solutions for breach of a written contract, breach of an oral contract, and various other claims under state law.

M/A-Com Technology Solutions has filed a motion to dismiss, in whole or in part, six of the eight counts of the complaint. For the following reasons, the Court will grant in part and deny in part the motion to dismiss.

I. Background

A. Factual Background

KSA is a California corporation with a principal place of business in San Diego, California. (Am. Compl. ¶ 2). It is an "independent sales representative, working on a straight commission basis, on behalf of its principals, manufacturers such as [M/A-Com], to create markets for and sales of the principals' products, in return for compensation, based solely upon sales made." (Id. ¶ 5).

M/A-Com Technology Solutions is a Delaware corporation with a principal place of business in Lowell, Massachusetts. (Id. ¶ 3). It "manufactures and sells microchips, and related component parts and engineering services, for use in miscellaneous technology industries." (Id. ¶ 6).

In June 2010, KSA and M/A-Com entered into a written Sales Representative Agreement ("SRA"). Under the SRA, KSA agreed to act as the authorized sales representative of M/A-Com in an exclusive territory that consisted of southern California, southern Nevada, New Mexico, and Arizona. (Id. ¶ 11; SRA Schedule A). Pursuant to the written contract, M/A-Com "agreed to compensate KSA with a sales commission for all sales activities by KSA within [the exclusive territory], at varying rates, depending on a number of factors stated in the [written contract]." (Am. Compl. ¶ 12). It is undisputed that the written contract contained a choice-of-law provision that provided that the "Agreement, and each and every purchase and sale or other contract hereunder or pursuant hereto, shall be construed and the rights and liabilities of the parties hereunder shall be determined in accordance with the laws of the Commonwealth of Massachusetts, U.S.A., without giving effect to the conflict of laws principles thereof." (SRA ¶ 15).

The complaint alleges that there "was one mutually agreed-upon modification of [the written contract] in or about June 2013, for new and sufficient consideration as to the sales commission percentage for Remec Broadband Wireless, which was increased to 2% from the 0.75% called for by the contract." (Am. Compl. ¶ 12). M/A-Com contends that the written contract was modified by an amendment on May 30, 2013. (Def.'s Mem. Support Mot. Summ. J. 4, 12; Def.'s Request Judicial Notice 1).

From June 2010 to June 2014, KSA acted as the authorized sales representative of M/A-Com in the assigned territory. (Am. Compl. ¶ 11). It "performed all terms, conditions, covenants and promises required of it" by the contract. (Id. ¶ 13). It "developed new business opportunities for [M/A-Com's] products and capabilities, solicited and procured sales, and maintained accounts, many which will produce future sales, on a long-term basis for [M/A-Com]." (Id. ). According to the complaint, KSA procured on behalf of M/A-Com known sales of $1 million in 2010, $11 million in 2011, $11 million in 2012, $8 million in 2013, and an unknown sum for 2014. (Id. ¶ 8). However, in September 2013, KSA allegedly became aware that M/A-Com had not been paying all commissions owed to it. (Id. ¶ 14). KSA complained about not being paid, and M/A-Com "began intentionally delaying and failing to pay further commissions to KSA for various sales to various customers in [the territory]." (Id. ).

The complaint alleges that in June 2014, KSA's "services were purportedly terminated by" M/A-Com. (Id. ¶ 11). According to the complaint, "there are millions of dollars in further sales of [M/A-Com] products, of which [M/A-Com] failed to notify KSA, and for which [it] did not pay any sales commissions to KSA, to which KSA is entitled...." (Id. ¶ 8). After the "purported termination, " M/A-Com sent KSA a "check in the approximate sum of $113, 000 for prior shortages on commission payments during the life of the written contract." (Id. ¶ 14). The complaint alleges that M/A-Com terminated the contract in response to KSA's demand for payment on unpaid commissions. (Id. ¶ 15). The termination allegedly occurred when KSA was "on the cusp of... landing monumental future sales based on [r]eference designs and design wins for customers with [its] territory." (Id. ). The complaint alleges that the termination was retaliatory, in violation of the implied covenant of good faith and fair dealing. (Id. ). The complaint alleges that because the termination was in bad faith, KSA is entitled to commissions for future (post-termination) sales that result from its sales activities. (Id. ¶ 17).

The complaint also alleges that the parties entered into an oral contract in December 2013 "to have KSA render [M/A-Com's] marketing and sales services to procure NRE for the development of a custom IC module for its customer, Qualcomm, Inc. " (Id. ¶ 21). It alleges that the agreement was corroborated and ratified in a February 11, 2014 e-mail from Jack Kennedy, one of M/A-Com's principal officers. (Id. ¶ 22). M/A-Com allegedly paid at least some sales commissions under the oral agreement. (Id. ).

B. Procedural Background

On October 1, 2014, KSA filed a complaint in this action in the Southern District of California. On October 23, 2014, M/A-Com moved to transfer the case to the District of Massachusetts on the ground that the underlying contract contained a mandatory forum-selection clause. On March 6, 2015, the court in California granted the motion to transfer venue because "the parties entered into an enforceable forum-selection clause, there is no extraordinary public interest in litigating the matter in ...


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