Personal Injury Law: Releases or Waivers Do Not Bar 93A Claims

Tongier, et al. v. EF Institute for Cultural Exchange, Inc., et al., Lawyers Weekly No. 12-266-11

Issue: Was a release signed by students and teachers on an educational tour waiving prospective G.L. c 93A claims valid?

Decision: No, allowing consumers to waive consumer protection rights under 93A violates the public policy underlying the statute.

Discussion: The Court held that a company that marketed and sold educational tours could be sued under Chapter 93A by the estates of four decedents who drowned during the trip despite a signed release of liability by the decedents prior to the trip. The Judge based his decision on the 2011 U.S. District Court holding in Doe v. Cultural Care, Inc. In Doe, the court determined that a waiver of 93A claims was unenforceable because it violated public policy. The 93A claim in Tongier was based on representations made by the Defendant Company that the tours were safe and that the guides were well-qualified.

Procedurally, this case was interesting as well. Initially, the Judge granted the Defendant’s motion for Summary Judgment on the 93A claim, among others. A month later, the Appeals Court denied the plaintiff’s interlocutory appeal on the 93A claim without a hearing. Finally, the Plaintiffs filed a motion asking the Judge to reconsider in light of the Doe case, resulting in the Summary Judgment reversal.

–Wassem Amin

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M&A: Meso Scale v. Roche: Reverse Triangular Mergers May Trigger Anti-Assignment Provisions in a Target’s Contracts.

By Wassem M. Amin

Reverse triangular mergers are a popular deal structure used to acquire all of the outstanding equity interests of a target company. In a reverse triangular merger, the acquirer forms a subsidiary which is merged with and into the target company with the target company surviving the merger, and the target stockholders receive cash, acquirer stock, or a combination of cash and stock. The end result is the same as a pure stock purchase, but reverse triangular mergers offer the advantage of requiring only the approval of a majority in interest of stockholders (unless a higher percentage is required by the target company’s governing documents), subject to statutory appraisal and dissenter’s rights, instead of the approval of all stockholders (or at least a sufficient amount of shares to qualify for a follow-on short-form merger).

M&A attorneys have long believed that a reverse triangular merger, like a stock purchase, does not involve an assignment of the target company’s assets and, therefore, does not trigger anti-assignment provisions in the target company’s contracts that restrict an “assignment by operation of law.”

However, in a case of first impression, the Delaware Court of  Chancery, in Meso Scale Diagnostics LLC v. Roche Diagnostics GMBH, concluded that there was ambiguity regarding whether such a provision should apply in the context of a reverse triangular merger and denied defendants’ motion to dismiss, thus calling into question this long-held belief.

Good resources:

Shannon D. Kung, The Reverse Triangular Merger Loophole and Enforcing Anti-Assignment Clauses, 103 Nw. U. L. Rev. 1037, 1052 (2009).

H. Justine Pace, Anti-Assignment Provisions, Copyright Licenses, and Intra-Group Mergers: The Effect of Cincom v. Novellis, 9 Nw. J. Tech. & Intell. Prop. 263 (2010).

Elaine D. Ziff, The Effect of Corporate Acquisitions on the Target Company’s License Rights, 57 Bus. Law. 767, 785 (2002).

Kingsley L. Taft, Introduction to Patents and M&A, 931 Pli/Pat 211, 222 (2008).