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Nacm-New England, Inc. v. National Association of Credit Managment, Inc.

United States Court of Appeals, First Circuit

June 11, 2019

NACM-NEW ENGLAND, INC., d/b/a BUSINESS CREDIT INTELLIGENCE, Plaintiff, Appellee,
v.
NATIONAL ASSOCIATION OF CREDIT MANAGMENT, INC., Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Timothy S. Hillman, U.S. District Judge]

          Michael J. Lambert, with whom Sheehan, Phinney, Bass & Green, P.A. was on brief, for appellant.

          Jack K. Merrill, with whom KSR Law was on brief, for appellee.

          Before Lynch, Lipez, and Barron, Circuit Judges.

          BARRON, CIRCUIT JUDGE.

         This appeal arises out of a breach of contract suit between a national trade association of credit professionals, National Association of Credit Management, Inc. ("NACM"), and one of its regional affiliates, NACM-New England, Inc., which does business under the name Business Credit Intelligence ("BCI"). NACM appeals from the District Court's September 24, 2018 order granting injunctive and declaratory relief to BCI. We affirm in part, vacate in part, and remand in part the order of injunctive relief. We vacate and remand the declaratory judgment.

         I.

         The following facts were found by the District Court and are not in dispute on appeal. NACM is a national trade association of commercial credit professionals that provides services, such as educational programs and legislative advocacy, to a series of regional "Affiliates." BCI is one of those Affiliates. Under the contract at issue, it has exclusive rights to provide credit services as a NACM Affiliate in the New England area.

         Affiliates have customers, called "members," to whom they provide "core services." These include access to credit information, education on credit issues, and collection services. Members of Affiliates are also members of NACM. NACM also provides education and professional certification coursework to members.

         Each Affiliate signs an identical contract with NACM. This appeal arises out of NACM's termination of the 2011 version of this agreement ("2011 Agreement") between BCI and NACM.

         The 2011 Agreement provides, among other things, that NACM will provide services to Affiliates on certain terms and that NACM will not "disclose the specific membership list, or portions thereof, of any Affiliate to any person or entity" that provides "core services." The 2011 Agreement permits either NACM or the Affiliate to terminate the agreement "for cause upon 90 days written notice to the other."

         The 2011 Agreement was automatically renewed on October 28, 2016. Thus, it would remain in effect until October 28, 2021 if not terminated for "cause." On May 12, 2017, however, NACM sent the Chief Operating Officers of the Affiliates ("Affiliate COOs") a new agreement to be discussed at a meeting of the NACM Board of Directors in June of 2017 and at a meeting of the Affiliate COOs that same month.

         Following those meetings, on June 14, 2017, Jon Flora, a member of the NACM Board, informed BCI that the NACM Board had approved a new Affiliate agreement. NACM circulated the new agreement to Affiliate COOs on July 13, 2017, and informed them that the NACM Board had "voted to simultaneously terminate all NACM Affiliated Association Agreements . . . and adopt the new NACM Affiliation Agreement . . . on August 18[, 2017] at 12 noon ET." Affiliates were required to return signed versions of the new agreement by that time "in order to maintain . . . Affiliate status." BCI was not happy with the new agreement's terms and refused to sign, thus risking disaffiliation upon termination of the 2011 Agreement.

         On August 21, 2017, NACM's President, Robin Schauseil, emailed BCI. She informed BCI that seventeen of the twenty-two Affiliates had signed the 2017 Agreement and thus that there was "now a super majority of support for the 2017 Agreement." In that email, Schauseil indicated that the 2011 Agreement would terminate effective November 17, 2017, pursuant to Article IV, Section 4.D of the 2011 Agreement. That section provides that the agreement may be "terminated . . . for cause upon 90 days written notice." Schauseil further explained that "[d]uring the 90-day termination period, NACM will work towards ensuring that members . . . have access to NACM products, services and benefits after November 17th." In anticipation of the termination of the 2011 Agreement with BCI, NACM awarded BCI's territory to NACM Connect, the Affiliate for the Chicago area.

         On November 8, 2017, BCI filed a complaint in Massachusetts state court against NACM. The complaint alleged, among other things, breach of contract. The case was removed a week later to the United States District Court for the District of ...


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