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Alere, Inc. v. Wallace

Superior Court of Massachusetts, Suffolk, Business Litigation Session

October 2, 2015

Alere, Inc. et al. [1]
David Wallace et al. [2] Opinion No. 132255

Filed Date October 7, 2015


Edward P. Leibensperger, Justice

Defendants sold their company, based in Florida, to plaintiff Alere, Inc., a company headquartered in Massachusetts, pursuant to a written Membership Interest Purchase Agreement (" Purchase Agreement"). Alere now alleges that defendants breached their obligations under the Purchase Agreement by violating a noncompetition covenant. Defendants move, pursuant to Mass.R.Civ.P. 12(b)(2), to dismiss contending that the court lacks personal jurisdiction over them or, in the alternative, that the dismissal is warranted under the doctrine of forum non conveniens . For the reasons stated below, defendants' motion is DENIED .


" On a motion to dismiss for lack of personal jurisdiction pursuant to rule 12(b)(2), 'the plaintiff[] bear[s] the burden of establishing sufficient facts on which to predicate jurisdiction over the defendant.'" Diamond Group, Inc. v. Selective Distribution Intern., Inc., 84 Mass.App.Ct. 545, 548, 998 N.E.2d 1018 (2013) (citations omitted). The court is to accept as true assertions in the plaintiff's affidavit, including any which controvert assertions in the defendant's affidavit. Id. In this case, the facts as submitted in the complaint and the affidavits submitted by both sides are not materially in dispute.

The Purchase Agreement was entered into on November 23, 2011. Alere acquired Arriva Medical, LLC (" Arriva") by the purchase of all of the membership interests in the LLC for a price of approximately $80 million.[3] Defendants, David Wallace and Timothy Stocksdale, were the founders of Arriva. At the time of the acquisition, they owned over 68% of Arriva through two holding companies. Wallace and Stocksdale each received over $20 million from the sale of Arriva to Alere, plus approximately $13 million in Alere stock.

Both Wallace and Stocksdale had numerous communications with Alere in connection with discussing, negotiating and closing the acquisition. Those communications were by telephone, conference call and email. Throughout those communications, Alere representatives were located in Massachusetts while Wallace and Stocksdale were located in Florida. In addition, legal counsel for Wallace and Stocksdale communicated frequently, by telephone, conference calls and email, with Alere representatives and Alere's counsel, located in Boston. Throughout those communications, the representatives of Wallace and Stocksdale were in Florida and the Alere representatives were in Massachusetts.

The result of the negotiations and communications was the execution of the Purchase Agreement. The Purchase Agreement mandated that the closing of the transaction " will take place at the offices of Foley Hoag LLP . . . Boston, Massachusetts." At the closing, Wallace and Stocksdale were paid approximately $17 million, with the remainder paid into escrow. The payments came from Alere's bank account in Massachusetts. The closing was a virtual closing in that it was conducted by electronic exchanges of the required documentation and signatures. Wallace and Stocksdale did not come to Boston for the closing. Wallace and Stocksdale, in their corporate and personal capacities, signed the Purchase Agreement.

The Purchase Agreement contains a choice of law provision. The parties agreed that " all matters arising out of or relating to this Agreement and any of the transactions contemplated hereby, including the validity hereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by the laws of The Commonwealth of Massachusetts . . ." Purchase Agreement, § 12.9. The Purchase Agreement does not contain a forum selection provision.

In connection with the acquisition, Wallace and Stocksdale entered into employment agreements with Arriva. Wallace was to serve as president of Arriva and Stocksdale was executive vice president. Wallace and Stocksdale remained employed by Arriva until December 31, 2013. During the period of 2011 to 2013, Wallace and Stocksdale, as officers of a subsidiary of Alere, regularly communicated with corporate executives at Alere. Again, the communications were by telephone and email. Wallace and Stocksdale did not come to Massachusetts to meet with Alere.

The Purchase Agreement contains a noncompetition provision. Wallace and Stocksdale agreed that for a period of five years from the closing date, they would not, directly or indirectly, compete with the business of Arriva. In addition, post-closing employment agreements between Arriva (now a subsidiary of Alere), on the one hand, and Wallace and Stocksdale, on the other hand, were entered into on the same date as the Purchase Agreement. The employment agreements contain a provision obligating Wallace and Stocksdale not to compete with Arriva (or any other Alere group company) for a period of one year after the termination of their employment with Arriva.

The complaint alleges that in 2014, a new company formed by Wallace and Stocksdale acquired certain business units from a company in Chapter 11 bankruptcy called Liberty Healthcare Group. One or more of the business units acquired by Wallace and Stocksdale through their new company, Liberty Medical, LLC, competes directly with Arriva's business.

As referenced above, there is no evidence that either Wallace or Stocksdale ever traveled to Massachusetts in connection with the purchase of Arriva or their employment by Arriva after Alere's acquisition. Wallace and Stocksdale are both Florida residents. Arriva's headquarters were, at all times relevant to this matter, in Florida. While employed by Arriva, Wallace and Stocksdale received payments of salary and other employment benefits from Arriva in Florida. Other than a vacation home in Massachusetts owned by ...

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