Abdallah v. Bain Capital, LLC , 752 F.3d 114 ( 2014 )

United States Court of Appeals
For the First Circuit
No. 13-2008
MURIELLE ABDALLAH,
Plaintiff, Appellant,
v.
BAIN CAPITAL LLC,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Thompson, Circuit Judge,
Souter, Associate Justice,*
Kayatta, Circuit Judge.
Phillippe Jean Joseph Pradal and Timothy K. Cutler, with
whom Pradal & Associates, PLLC and Cutler & Wilensky LLP were on
brief, for appellant.
David Casey, with whom Christopher B. Kaczmarek and
Littler Mendelson, P.C. were on brief, for appellee.
June 3, 2014
*
Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
KAYATTA, Circuit Judge. Plaintiff Murielle Abdallah and
the members of the class that she seeks to represent worked in a
luggage factory in Hénin-Beaumont, France. The factory was owned
by Samsonite, which was in turn controlled by an investment group
led by Bain Capital, LLC. In 2005, Samsonite sold the factory to
a thinly-capitalized third party, HB Group. In early 2007, a
French court ordered the liquidation of the factory, costing
Abdallah and her coworkers their jobs. HB Group had no resources
with which to pay Abdallah and her coworkers the post-termination
benefits to which they were entitled under French law. In 2012,
Abdallah commenced this putative class action, seeking to hold Bain
liable, under theories of tortious interference with employment
arrangements, fraud, negligent misrepresentation, and unjust
enrichment, for losses suffered by the factory's workers as a
result of the sale and liquidation, which Abdallah claims Bain
orchestrated. Pointing to the passage of over five years between
the liquidation of the factory and the commencement of this action,
and rejecting Abdallah's arguments for tolling the running of the
applicable three-year limitations period, the district court
dismissed the complaint. For the following reasons, we affirm.
I. Background
This case was dismissed under Federal Rule of Civil
Procedure 12(b)(6), before the parties could engage in the fact-
finding necessary to determine which side's versions of events is
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true. In describing the events giving rise to this case, we
therefore look to the allegations of the complaint, see
Rodríguez-Vives v. P.R. Firefighters Corps of P.R., 743 F.3d 278,
280 (1st Cir. 2014), as well as statements Abdallah admittedly made
in French proceedings as reflected in records from those
proceedings, the authenticity of which no party contests, see In re
Colonial Mortg. Bankers Corp., 324 F.3d 12, 16 (1st Cir. 2003)
(stating that a court may consider "matters of public record" when
dismissing a complaint on the basis of an affirmative defense);
Boateng v. InterAmerican Univ., Inc., 210 F.3d 56, 60 (1st Cir.
2000) (noting in dicta that "a court ordinarily may treat documents
from prior state court adjudications as public records"). In
reviewing all of these materials, we draw all reasonable inferences
in Abdallah's favor. See Rodríguez-Vives, 743 F.3d at 280.
In 2003 a group of investors led by Bain purchased for
$106,000,000 approximately 85 percent of Samsonite, which owned the
factory at issue in this case and employed more than 200 workers
there. Bain was then faced with a problem. It wanted to shut down
the factory, but, under French law, doing so would have required
Samsonite to pay between $75,000,000 and $120,000,000 to fund a
"collective redundancy plan" for the laid-off employees. Bain and
Samsonite avoided either making a massive severance payment or
retaining an unprofitable factory by hiring a third party to buy
the factory. To accomplish this, Samsonite formed a wholly owned
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subsidiary, which Abdallah refers to as NewCo, and transferred the
factory to it. Samsonite then sold NewCo to HB Group for one euro.
HB Group, in turn, was controlled by Jean-Jacques Aurel, an
entrepreneur who had been involved in a similar transaction
involving Samsonite's competitor, Delsey. Samsonite also paid
approximately €9,000,000 to HB Group, €1,000,000 of which was spent
on a "shareholder advance." Though HB Group told the factory
employees that the factory would be converted to the production of
solar panels, no solar panels were ever produced. NewCo filed for
bankruptcy less than a year later.
On February 15, 2007, after NewCo's bankruptcy, a French
court ordered the "judicial liquidation" of the factory. It
appears that this is the date on which the employment of Abdallah
and her coworkers formally terminated. With neither NewCo nor HB
Group able to provide the post-termination benefits required under
French law, Abdallah and her coworkers filed suit against Samsonite
and its shareholders, including Bain, in French civil court. In
the summer of 2007, meanwhile, Bain and the other investors sold
their interest in Samsonite to CVC Capital Partners for
$1,700,000,000.
In the French civil court proceeding, the plaintiffs
eventually secured a ruling canceling the sale of NewCo by
Samsonite to HB Group. During that litigation, Bain asserted that
it was "a stranger to the contracts and all the acts that pertained
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to the litigation." Based on this assertion, the French court
ultimately declared Bain "exterior to the annulment procedure."
After the civil court cancelled the sale of NewCo, the plaintiffs
obtained a ruling from a French labor court that Samsonite had
never stopped being their employer. The labor court found,
however, that it had no jurisdiction over Bain because of the civil
court's findings.
Meanwhile, Aurel, HB Group's principal, was criminally
prosecuted for fraud in France and sentenced to three years in
prison. In 2011, he provided an affidavit to Abdallah asserting
that a representative of Bain was present at Aurel's meetings with
Samsonite in which the scheme for the transfer of the factory was
hatched. Moreover, Aurel revealed, Samsonite's representative
repeatedly sought the assent of Bain's representative to the key
elements of the scheme. Abdallah claims that this 2011 affidavit
revealed to her for the first time that Bain directed the transfer
of the factory.
Unsatisfied with the remedies she had obtained in French
court against Samsonite, Abdallah then sued Bain in the United
States District Court for the District of Massachusetts in November
2011, alleging fraud, unjust enrichment, tortious interference with
employment agreements, and unfair business practices in violation
of Mass. Gen. Laws Ch. 93A § 2(a). Bain moved to dismiss
Abdallah's complaint, arguing that Abdallah's causes of action
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accrued when her employment formally terminated on February 15,
2007, and that her complaint was therefore barred by the applicable
statutes of limitation. Abdallah countered that, under various
tolling doctrines, the statutes of limitation on her causes of
action did not begin to run until 2011, when she learned from Aurel
the details of Bain's involvement in the factory's sale.
The district court (Tauro, J.) sided with Bain and
dismissed Abdallah's complaint without prejudice, making clear that
"[i]f additional facts regarding the information that came to light
in September 2011 would justify invoking [tolling doctrines],
Abdallah may refile a complaint . . . ." See Abdallah v. Bain
Capital LLC, 880 F. Supp. 2d 190, 199 (D. Mass. 2012). In October
2012, Abdallah filed a new complaint with additional details,
including some of the facts recounted in this opinion, about what
and when she knew of Bain's involvement in the sale of the factory.
The new complaint alleged tortious interference, fraud, negligent
misrepresentation and unjust enrichment. Because Abdallah filed a
new complaint rather than amending her previous one and, in
violation of Mass. Dist. Ct. Local Rule 40.1(G), failed to identify
the new case as related to the previous one, the clerk randomly
assigned the new case to Judge Woodlock rather than Judge Tauro.
See Abdallah v. Bain Capital LLC, No. 12-12027-DPW, 2013 WL
3491074, *1 & n.1 (D. Mass. July 9, 2013). After concluding that
the new facts alleged in the new complaint did not alter Judge
Tauro's conclusion, Judge Woodlock dismissed the case as barred by
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the three-year statute of limitations. Id. at *5. This appeal of
Judge Woodlock's judgment dismissing the case with prejudice
followed.
II. Standard of Review
When the allegations in a complaint show that the passage
of time between the events giving rise to the claim and the
commencement of the action exceeds the applicable limitations
period, a district court should grant a 12(b)(6) motion by the
defense if the complaint (and any other properly considered
documents) "fails to 'sketch a factual predicate' that would"
provide a basis for tolling the statute of limitations. Trans-Spec
Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 320 (1st Cir.
2008) (quoting LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507,
509–10 (1st Cir. 1998)).
In making such an assessment under Rule 12(b)(6), a
district court engages in no fact finding. Rather, it presumes
that the facts are as properly alleged by plaintiffs and/or
reflected in other properly considered records, with reasonable
inferences drawn in plaintiffs' favor. See, e.g., Schatz v.
Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012).
Our review of the district court's reading of the complaint and
associated records is de novo. Id. Similarly, to the extent that
the district court needed to consider issues of law (for example,
whether the complaint adequately alleges facts that would plausibly
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make out a claim for fraudulent concealment), our review of such
questions of law is also de novo. See, e.g., Simmons v. Galvin,
575 F.3d 24, 30 (1st Cir. 2009). Finally, our review of the
district court's judgment that the facts and law as so determined
did not warrant equitable relief is for abuse of discretion.
Rivera-Díaz v. Humana Ins. of Puerto Rico, Inc., No. 13-1475, 2014
WL 1395064, at *3 (1st Cir. Apr. 11, 2014).
III. Analysis
Abdallah does not dispute that, absent tolling, her claim
accrued on February 15, 2007, the date that the French court
ordered the judicial liquidation of the factory and Abdallah's job
loss became certain. She also does not dispute that her causes of
action are subject to a three-year statute of limitations under
Massachusetts law. See Mass. Gen. Laws ch. 260, § 2A.
Accordingly, this suit against Bain, which was commenced on October
30, 2012,1 must be dismissed as time barred unless there is a basis
to conclude that the statute of limitations was tolled. Abdallah
attempts to establish that tolling is appropriate using two
doctrines: fraudulent concealment and equitable tolling.
In Massachusetts, a statute of limitations can be tolled
because of fraudulent concealment if "'the wrongdoer . . .
concealed the existence of a cause of action through some
1
Abdallah did not appeal the dismissal of her first action
filed in November of 2011.
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affirmative act done with intent to deceive,'" but "'[t]he statute
of limitations . . . is not tolled if the plaintiff has actual
knowledge of the facts giving rise to his cause of action.'"
Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc.,
412 F.3d 215, 239 (1st Cir. 2005) (quoting Stark v. Advanced
Magnetics, Inc., 50 Mass. App. Ct. 226, 233-34 (2000)); see also
Mass. Gen. Laws ch. 260, § 12. The doctrine of equitable tolling
also provides no relief to a plaintiff who knows of facts
sufficient to bring the cause of action. Indeed, equitable tolling
only applies "if a plaintiff exercising reasonable diligence could
not have discovered information essential to the suit." Bernier v.
Upjohn Co., 144 F.3d 178, 180 (1st Cir. 1998) (citing Protective
Life Ins. Co. v. Sullivan, 425 Mass. 615, 631 (1997)).
To assess whether Abdallah knew so little before November
2009, so as to justify the tolling of the statutory limitations
period under either theory, we begin with the nature of the claims
she now seeks to press against Bain. All of her counts seek, in
substance and form, to hold Bain liable for the allegedly
fraudulent creation and sale of NewCo by Samsonite during the
period the Bain-led investor group owned a controlling stake in
Samsonite. She does not sue Bain for anything it did to her
directly. Rather, she seeks to hold Bain liable for Samsonite's
actions by alleging that Bain "not only interfered in the decision
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making of Samsonite but dictated Samsonite's actions when [it was]
negotiating with HB Group."
Abdallah knew well prior to 2009 precisely what Samsonite
had done, even to the point of securing rulings against Samsonite
in French courts in 2008. So the only remaining question is what
to make of Abdallah's claim that she did not know until after
November of 2009 that, as she now says she knows, Bain "dictated
Samsonite's actions." The answer to this question seems clear. It
took no imagination--or implausible allegation--to suggest that
Samsonite's owners must have authorized such a major and highly
visible financial transaction by the company they had just
acquired. In any event, Abdallah actually sued Bain in French
civil court at the time, explaining that she had "documents . . .
show[ing] that the shareholders of S[amsonite], especially through
the active brokerage of B[ain] . . . intervened directly in the
organization of the disputed operation." Similarly, she argued to
the French labor court in 2008 that "driven by its main
shareholders" (which she does not deny she knew included Bain)
"S[amsonite] . . . clearly abused its right to sell the factory,
and committed fraud." She explicitly alleged that Bain had
actually suggested to Samsonite the consultants and lawyers who put
together the fraudulent sale, based on prior similar work they had
done for another company.
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Abdallah's first response to the foregoing recitation of
her knowledge in 2007 is procedural. For the first time on appeal,
she argues that the district court wrongly considered only the
portion of the French trial record that Bain provided with its
brief and not other portions of the record in French court.
Abdallah does not explain, however, why reviewing any of these
other documents would have shown that she did not know what the
excerpts upon which the district court relied show she knew. Nor
does she explain why she did not simply translate the documents and
provide that translation to the district court. Abdallah's
"perfunctory treatment," of the issue, "as well as [her] raising
this argument for the first time on appeal, waives" it. Randall v.
Laconia, NH, 679 F.3d 1, 5 (1st Cir. 2012); see also French v. Bank
of N. Y. Mellon, 729 F.3d 17, 21 n.2 (1st Cir. 2013) (treating as
waived issue raised for the first time on appeal and unsupported by
relevant citation).
Abdallah next argues that she was unable to file suit
against Bain in America before 2011 because, she alleges, she only
discovered then, through Aurel's affidavit, certain additional
facts that were necessary to bring her suit. Specifically,
Abdallah alleges that she learned for the first time in 2011 that
a Bain representative attended all of the important meetings
between Samsonite and Aurel and that "Samsonite's representative
repeatedly sought [Bain's] assent to the main points of the scheme"
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during those meetings. Abdallah also alleges that Aurel's
affidavit "explained why . . . an officer of Bain's group[] had
recruited . . . the owner of PR Consulting . . . in order to find
the purchaser of the Hénin-Beaumont factory."
In fact, however, in her 2007 French pleadings Abdallah
asserted that Bain provided the impetus for the fraudulent scheme,
alleging that a company called PR Consulting was "hir[ed] by
Samsonite on a proposal from one of its main shareholders, Bain
Capital." As to why Bain caused the hiring of PR Consulting,
Abdallah herself observed in 2007 that Bain latched onto the
consultants "following the 'excellent work' carried out by the same
protagonists (PR Consulting[ and] A[urel] . . .) on behalf of the
Delsey Group, in which they performed the same fraudulent
transaction, under the same conditions, each in the same role with
same outcome . . . ."
To the extent there are any new details at all in Aurel's
affidavit, they are not essential in order to plead the claims as
well as she has pled them now. The existential nature of the
corporate transaction, Bain's leadership of the group that acquired
Samsonite, its role in proposing the consultants who put together
the fraudulent sale, its documented direct intervention in the
sale, and the precise details of the actual alleged fraud by
Samsonite, were all known in 2007. Together these facts comprise
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each of the categories of information contained in the present
complaint.
Of course Abdallah learned some new information from
Aurel. But a limitations period does not begin to run only when
plaintiff learns all facts relevant to a claim. That is what
discovery under the Federal Rules of Civil Procedure is for.
Equitable tolling does not apply when a plaintiff has facts
essential for the commencement of a suit (nor does it always apply
when a plaintiff does not have such facts). See, e.g., Protective
Life Ins. Co. v. Sullivan, 425 Mass. 615, 631 (1997) ("[T]he
doctrine of equitable tolling is applicable only where the
prospective plaintiff did not have, and could not have had with due
diligence, the information essential to bringing suit.").
Similarly, fraudulent concealment requires, at least, concealment
of facts necessary to bring a cause of action. See, e.g., Stark 50
Mass. App. Ct. at 234 (holding that the statute of limitations is
"not tolled [due to fraudulent concealment] if the plaintiff has
actual knowledge of the facts giving rise to his cause of action").
Whether Abdallah now actually would have a claim against
Bain but for the expiration of the limitations period we need not
decide. Certainly, allegations that a parent directs or controls
particular actions by a subsidiary are generally not enough to
render the parent liable for all torts related to those actions.
See Esmark, Inc. v. NLRB, 887 F.2d 739, 759 (7th Cir. 1989)
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("Parents and dominant shareholders are almost always 'active
participants' in the affairs of an owned corporation. And, in the
usual case, the exercise of such control . . . does not result in
the owner's personal liability."); Scott v. NG U.S. 1, Inc., 450
Mass. 760, 770 (2008) (when determining whether a parent is liable
for a subsidiary's torts, Massachusetts courts consider whether
"one entity exercised 'pervasive control' over another, and whether
'confused intermingling' exists sufficient to disregard the
corporate formalities"). Perhaps what Abdallah seeks to explore is
a theory of liability for acting in concert. See Restatement
(Second) of Torts § 876 (1979); see also Taylor v. Am. Chemistry
Council, 576 F.3d 16, 35 (1st Cir. 2009) (discussing the
application of section 876 in Massachusetts). Whatever the case
may be, if there is a viable claim for pleading purposes now, then
there was one as well in 2007.2
Abdallah argues finally that, even if she was aware of
Bain's possible involvement in the fraudulent sale at the time she
2
Because we conclude that nothing Abdallah learned in 2011
from Aurel was essential to bringing suit, we also need not
consider whether she could have discovered that information through
an earlier exercise of due diligence. Cf. González v. United
States, 284 F.3d 281, 292 (1st Cir. 2002) (To rely on fraudulent
concealment under Massachusetts law, a "plaintiff must have failed
to discover these facts within the normal limitations period
despite his or her exercise of due diligence."); Protective Life
Ins. Co., 425 Mass. at 631 (1997) ("[T]he doctrine of equitable
tolling is applicable only where the prospective plaintiff . . .
could not have had with due diligence[] the information essential
to bringing suit.").
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began the French litigation, Bain should be estopped from arguing
that she had knowledge of her causes of action before 2011 because
it told a French court that it was "a stranger to the contracts and
to all the acts that pertained to the litigation." Abdallah,
though, clearly did not rely on that general denial, as she pressed
on with her claims in the French civil and labor courts. She
therefore cannot make a viable estoppel argument. See Olsen v.
Bell Tel. Labs., Inc., 388 Mass. 171, 176 (1983) (holding in the
statute of limitations context that "[u]nless the defendants 'made
representations they knew or should have known would induce the
plaintiff to put off bringing suit and . . . the plaintiff did in
fact delay in reliance on the representations,' there is no
estoppel" (quoting White v. Peabody Constr. Co., 386 Mass. 121,
134-135 (1982))).
And, even if Bain had known Abdallah would rely on Bain's
general denial and if Abdallah had in fact done so, she cites no
authority, nor are we aware of any, for the proposition that a lie
told in defense of a suit tolls the running of the limitations
period where the plaintiff suspects the truth and persists with the
suit. The better recourse, upon discovering such a lie, is to
return to the original forum and seek to have the case reopened.
In any event, we need only hold here that Bain's general assertion
that it was a "stranger to" the Samsonite transaction, which
assertion neither contested the specific facts known by Abdallah,
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nor persuaded her to drop her suit against Bain, provides no basis
for tolling the statute of limitations.
IV. Conclusion
For the foregoing reasons the judgment of the district
court is affirmed.
So ordered.
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