United States District Court, D. Massachusetts
PARAFLON INVESTMENTS, LTD.
FULLBRIDGE, INC., PETER OLSON, and CANDICE OLSON
FINDINGS OF FACT, RULINGS OF LAW, AND ORDER AFTER A
RICHARD G. STEARNS, UNITED STATES DISTRICT JUDGE
on the credible testimony and exhibits offered at trial, and
the stipulations of the parties, I make the following
findings of fact.
Plaintiff Paraflon Investments, Ltd., is a private limited
company with a principal place of business in the British
Virgin Islands. Stipulation of Facts (SOF) (Dkt # 95) ¶
1. It is wholly owned by a family trust, id., of
which Michael Sarkesian is the ultimate beneficiary,
id. ¶ 2. Sarkesian's role is to present
investment opportunities to Paraflon. Tr. Day 1 (Sarkesian)
Defendant Fullbridge, Inc., is a Delaware corporation with a
principal place of business in Boston, Massachusetts, that
provides training to college students, recent graduates, and
young professionals to prepare them for the workplace. SOF
¶ 6. Defendants Candice and Peter Olson are the founders
of Fullbridge and served as its co-Chief Executive Officers
(CEOs) from its founding in June of 2010 until August of
2015. Id. ¶ 7; Trial Ex. 163 at 7. Peter Olson
then served as the sole CEO from August of 2015 until his
resignation on May 25, 2016. SOF ¶ 8.
Peter Olson is a graduate of Harvard University, Harvard Law
School, and Harvard Business School. He previously served as
chair and CEO of a major publisher, Random House, before
becoming a professor at Harvard Business School. Tr. Day 4
(Mr. Olson) at 31:21-33:18. Candice Olson is a graduate of
Stanford University, Harvard Business School, and Teachers
College at Columbia University. She previously worked at
American Express and Time Warner, before serving as a
cofounder and CEO of iVillage, Inc. Tr. Day 3 (Mrs. Olson) at
Work in Saudi Arabia
Almost from its inception, Fullbridge was starved for cash
and struggled to keep up with operating expenses. As a
stopgap, the Olsons turned to the market for new investors
and opportunities to expand Fullbridge's business. Trial
Ex. 163 at 13.
Olsons succeeded in winning the Kingdom of Saudi Arabia
through a royal subsidiary called Takamol as a new client.
Takamol was established by the Saudi Ministry of Labor to
educate and train new entrants to the Saudi labor market. SOF
May 5, 2014, Takamol issued a Request for Proposal (RFP), to
which Fullbridge responded. Trial Ex. 192 at 5. Fullbridge
was thereafter notified electronically and verbally that it
had been selected to design and implement a training program,
under the designation Wave 1. Mrs. Olson Dep. at 39:11-17.
August 11, 2014, Takamol and Fullbridge executed a Master
Agreement. Trial Ex. 192 at 2. Section 1.4 provided that
“[t]his agreement will serve as a framework for the
terms of each Work Order. Each Work Order entered between the
Parties will serve as a separate contract and will adopt the
terms of this Agreement.” Id. at 5.
Agreement did not, by its terms, limit its application to
Wave 1. Id.; Tr. Day 4 (Mr. Olson) at 36:7-9,
77:21-78:6. Fullbridge understood, rather, that the Agreement
would govern all of its work for Takamol. Tr. Day 3 (Mrs.
Olson) at 71:15-24, 72:4-7. Takamol representatives and its
attorneys told Peter Olson that the Agreement would cover all
work going forward, including, as described below, Waves 2
and 3. Tr. Day 4 (Mr. Olson) at 36:16-21.
November 2, 2014, Takamol issued a second Wave 2 RFP, to
which Fullbridge again responded. Trial Ex. 16. Takamol
selected Fullbridge as the winning bidder for Wave 2.
November 27, 2014, Ehab Albakri of Fullbridge sent an email
to Khalid AlYousef and Nabil Tuker of Takamol containing the
proposed pricing for Wave 2, which AlYousef accepted on
behalf of Takamol in a return email the same day. Trial Ex.
16. Albakri understood Takamol's email as
“confirming the awarding details and the agreed final
work orders from Waves 1 and 2 stated that they were
“being executed pursuant to the [Master] Agreement . .
., the terms of which are being incorporated herein by
reference.” Trial Exs. 193-196.
Takamol had a practice of “perform[ing] now, paper[ing]
later.” Tr. Day 3 (Mrs. Olson) at 80:15-19. In other
words, Takamol expected Fullbridge to begin working before a
contract or work order was formally executed. Tr. Day 5
(Young) at 42:4-6.
Fullbridge began work on Wave 1 before the Master Agreement
was signed, relying on Takamol's “paper
later” practice. Tr. Day 4 (Mr. Olson) at 75:3-11.
Takamol verbally assured Fullbridge that the award had been
granted, if not formally reduced to writing. Tr. Day 3 (Mrs.
Olson) at 77:7-24.
Fullbridge's work for Takamol on Wave 1 and Wave 2
proceeded without any red flags despite the unfinished
formalities. Fullbridge began production in October of 2014
on a Wave 1 project that was completed in March of 2015, but
was only “papered” in February of 2015. Tr. Day 3
(Mrs. Olson) at 80:1-19. Fullbridge began production on
another Wave 1 project several months before it was papered
on April 28, 2015. Id. at 80:24-81:19.
Similarly, Fullbridge began working on Wave 2 projects due
for completion in September of 2014 before being papered on
August 20, 2014. Tr. Day 3 (Mrs. Olson) at 78:6-16.
Wave 3 Award
April 29, 2015, Takamol issued a third RFP. Trial Ex. 31. The
Wave 3 RFP stated that the winning “[b]idder shall be
notified in writing directly and solely by Takamol, ”
and “shall sign a Framework Agreement within the period
so specified by Takamol.” Id. § 7.14. The
executive summary similarly provided that “Takamol will
enter into 3-year framework agreements . . . with each
successful Bidder.” Id. § 1.
May 27, 2015, Fullbridge submitted a bid for the Wave 3
project. Trial Ex. 44.
August 17, 2015, Fullbridge employees Stephen Young
(Relationship Manager) and Abeer AlHashimi (Chief Fullbridge
Representative in the Middle East) met with Takamol's
representatives Ghadeer Khali (Product Development), Fahad
AlRabaa (Procurement Representative), and Tuker in Saudi
Arabia to discuss the Wave 3 RFP, while Fullbridge's
Peter Olson, Elena Butler (Vice President of International
Business, and Caroline Young (Director of Product
Development) participated in the meeting by phone. Tr. Day 4
(Mr. Olson) at 83:11-84:8-19.
Khali informed Fullbridge that it had won a substantial share
of the Wave 3 project and would be paid $40 million over
three years. Tr. Day 4 (Mr. Olson) at 84:20-85:18, 86:10-19.
More specifically, Khali and AlRabaa stated that Takamol
would purchase approximately 8, 000 learning hours from
Fullbridge capped at $4, 800 per hour. Id. at
an August 17, 2015 email, Butler memorialized the
“[t]op line” of the meeting by stating that it
“went great - much better than we were expecting,
” and that they had reached “[h]igh level
agreement on price with [the] promise of 8, 000 learning
hours volume at an average of $4, 800” per learning
hour for a total of “$40M [in] revenue over the next 3
years.” Trial Ex. 70. Butler elaborated that “we
will be the top vendor awarded . . . [and] will have the
greatest scale if we reach an agreement on price.”
another August 17, 2018 email, Stephen Young, quoting from
his meeting notes, stated that “Fullbridge [was] slated
to be awarded a large portion of wave 3 families (highest
among any bidder) pending final pricing offer, ” and
that “[s]pecific details of how many courses [are] to
be awarded and which families cannot be disclosed until an
agreement on price is reached.” Trial Ex. 71. Young
also wrote that “[o]nce an agreement has been reached,
it should take 2 to 3 weeks for necessary documents to be
finalized / signed and course production can begin.”
Id. That same day, he followed up with Khali and
AlRabaa about “reach[ing] an agreement in terms of
pricing for wave 3 very soon.” Id.
August 18, 2015, AlHashimi sent an email to Rivera, among
other Fullbridge employees, indicating that “initial
feedback on the pricing we sent was good, ” and that
Fullbridge expected to hear from Takamol “on the exact
volume and families awarded in the next two days.”
Trial Ex. 74.
Fullbridge did not believe that a new Master Agreement had to
be signed for Wave 3 since one already existed. Tr. Day 5
(Young) at 79:12-80:3.
Fullbridge, in sum, understood that it had agreed “on
the price, on the number of hours, and the duration of three
years; and that rested on top of a master contract, a master
framework contract.” Tr. Day 3 (Mrs. Olson) at
41:16-20. As Candice Olson noted in a September 16, 2015
email, “Takamol indicated that [Fullbridge had] won 40%
of total $100mm Wave 3 project, or $40mm over 3 years”
and that “[t]he contract is expected to begin in Q4,
ramping up to full production by Q1.” Trial Ex. 84.
Fullbridge and Takamol had not, however, agreed on the
“second layer” of course details, namely which
families of courses Takamol desired and the cost and duration
of each course. Tr. Day 3 (Mrs. Olson) at 97:24-101:6.
Fullbridge immediately began work on Wave 3 by, among other
things, mapping out course hours, determining production time
and the cost of each course, hiring translators and writers,
and finding office space. Tr. Day 3 (Mrs. Olson) at
the summer of 2015, Fullbridge had been working with Takamol
for a year and a half and had received over $5 million in
payments. Tr. Day 3 (Mrs. Olson) at 91:13-21. Since the
spring of 2015, Stephen Young had been working in
Takamol's offices in Saudi Arabia three or four days per
week as the “go-to person” for technical issues.
Tr. Day 5 (Young) at 44:6-21. He also helped find appropriate
speakers, video productions, and actors with the appropriate
Saudi dialect and accent. Id. at 53:10-55:12.
Fullbridge remained in regular contact with Khali about Wave
3 regarding, inter alia, video production locations,
studio rentals, and hiring choices. Tr. Day 4 (Mr. Olson) at
87:12-22; Tr. Day 3 (Mrs. Olson) at 44:8-14, 45:1-9. Emails
between Fullbridge and Takamol from June of 2015 onward
discussed logistics, pricing, and families of courses for
Wave 3. Tr. Day 1 (Rivera) at 107:4-11.
September of 2015, Peter Olson instituted weekly meetings for
Fullbridge's projects that AlHashimi participated in from
Saudi Arabia by video. Tr. Day 4 (Mr. Olson) at 91:7-15. Each
week, Peter Olson asked if it was fair to represent to
investors that Fullbridge had won the Wave 3 award, and
AlHashimi repeatedly confirmed that the deal was still on.
Id. at 91:11-92:9.
January of 2016, Fullbridge invested in an apartment in
Riyadh to house two of its employees. Tr. Day 5 (Young) at
Finances and Wave 3 Developments
all relevant times, Fullbridge retained Bradley Woods &
Co., Ltd., as its strategic and financial advisor in matters
of raising capital, analyzing financial documents, creating
financial, business, and strategic plans, and assembling and
leading broker ...