Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca1-09-01934/USCOURTS-ca1-09-01934-0/pdf.json

Parties Involved:
Paradigm Biodevices, Inc.
Appellee
Vertex Surgical, Inc.
Appellant

Document Text:

The Hon. David H. Souter, Associate Justice (Ret.) of the *

Supreme Court of the United States, sitting by designation.

Not for Publication in West’s Federal Reporter

United States Court of Appeals

For the First Circuit

No. 09-1934

VERTEX SURGICAL, INC.,

Plaintiff, Appellant,

v.

PARADIGM BIODEVICES, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before

Boudin, Circuit Judge,

Souter, Associate Justice,*

and Howard, Circuit Judge.

Barbara H. Kramer, with whom Mitchell A. Kramer and Kramer &

Kramer, LLP were on brief, for appellant.

Thomas E. Kenney, with whom Robert R. Pierce and Pierce &

Mandell, P.C. were on brief, for appellee.

August 4, 2010

Case: 09-1934 Document: 00116095301 Page: 1 Date Filed: 08/04/2010 Entry ID: 5468166
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SOUTER, Associate Justice. The appellee Paradigm

Biodevices, Inc. does business in Massachusetts producing and

distributing medical equipment. It contracted with a Georgia

corporation, the plaintiff-appellant Vertex Surgical, Inc., to act

as a sales representative in Georgia and portions of nearby states.

The written contract had both a choice of law clause

(Massachusetts) and a forum selection provision (Massachusetts

federal court). When Paradigm terminated the agreement, Vertex

charged it with breach and sued in the district court for

Massachusetts, claiming among other things that Paradigm had

violated the Georgia Wholesale Distribution Act, Ga. Code Ann.

§§ 10-1-700 et seq., which requires payment of sales commissions

within 30 days after termination of a contract like the one in

question, and provides penalties for failure. The Act further

declares that its provisions “may not be waived,” and directs that

“the courts of this state shall not recognize any purported

waiver.” Ga. Code Ann. § 10-1-703.

Vertex moved for summary judgment on the Georgia

statutory claim, which the district court understood to depend on

whether the Georgia law “can affect the rights of the parties,

given the Agreement’s choice of Massachusetts law to govern the

terms of the Agreement.” The court concluded that it could not:

the statute “ultimately attempts to provide further regulation of

the terms set out in the Agreement” and “[s]uch regulation by

Case: 09-1934 Document: 00116095301 Page: 2 Date Filed: 08/04/2010 Entry ID: 5468166
 There is no question that it was proper for the district 1

court to determine the meaning of the contractual terms; absent a

question of extrinsic fact requiring trial (there being none raised

here), Massachusetts law treats contract construction as an issue

for the court. Teragram Corp. v. Marketwatch.com, Inc., 444 F.3d

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Georgia law is barred by the Agreement’s choice to have

‘Massachusetts law exclusively . . . govern all terms of this

Agreement.’” Notwithstanding the Georgia statute’s non-waiver

provision, the district court concluded that applicable

Massachusetts choice of law rules did allow for an effective waiver

by a clause choosing the law of a state other than Georgia, and it

granted summary judgement on the point sua sponte to Paradigm. On

this de novo review, Rosario v. Dept. of Army, 607 F.3d 241, 246

(1st Cir. 2010), we think the omission of a preliminary step in the

analysis undermines the district court’s reasoning, and we thus

vacate and remand.

The court’s analysis rests on the premise that Vertex

waived the benefit of the Georgia statute by agreeing to the

contract’s choice of law provision. It relied primarily on a case

in which we construed a choice of law clause covering an

“[a]greement and the rights and obligations of the parties

[t]hereto,” Northeast Data Sys., Inc. v. McDonnell Douglas Computer

Sys. Co., 986 F.2d 607, 609 (1st Cir. 1993), thus assuming that the

provision used here extends to any issue that may arise in

litigation following a claimed breach. The parties’ choice of law

clause, however, fell short of such plenary scope.1

Case: 09-1934 Document: 00116095301 Page: 3 Date Filed: 08/04/2010 Entry ID: 5468166
1, 9 (1st Cir. 2006).

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Both the choice of law and forum selection provisions

occurred in §25.1 of the written agreement. As for choice of law,

the parties agreed that “Massachusetts law exclusively shall govern

all terms of this Agreement, including this paragraph.”

“Agreement” is not a defined term, but its meaning is indicated by

the contract’s title, “Independent Agent Agreement,” and an

integration clause stating that “[t]his Agreement contains the

entire agreement . . . between the parties.” We therefore conclude

that “Agreement” capitalized refers to what the parties signed,

with the consequence that “terms” refers to words used in the

document, and that law “govern[ing]” them speaks to the source of

rules used to determine their meaning. Matters apart from

construing “terms” are ostensibly left alone, including any choice

of law issue about the applicability of post-breach statutory

obligations imposed by a state other than Massachusetts having an

interest in the contractual relationship of principal and sales

agent.

This reading is confirmed by contrasting the scope of the

choice of law clause (“all terms of this Agreement”) with that of

the immediately preceding forum selection clause: “all disputes in

any way relating to, arising under, connected with, or incident to

Case: 09-1934 Document: 00116095301 Page: 4 Date Filed: 08/04/2010 Entry ID: 5468166
 The forum selection clause requires that all such disputes 2

be brought in federal district court in Boston if possible, or in

the Commonwealth’s courts if federal subject matter jurisdiction is

wanting.

 Our own decision in Northeast Data Systems is 3

distinguishable for two reasons. First, as in Jacobson, the narrow

choice of law provision in the parties’ contract here “does not

state that the rights of the parties are to be governed by

[Massachusetts] law,” 419 Mass. at 580 n.9, 646 N.E.2d at 746 n.9;

see also Valley Juice Ltd., Inc. v. Evian Waters of France, Inc.,

87 F.3d 604, 612 (2d Cir. 1996). And second, Northeast Data

Systems “was concerned only with a chapter 93A claim under

Massachusetts law, which (critically) contains no anti-waiver

provision.” New England Surfaces v. E.I. Du Pont de Nemours & Co.,

546 F.3d 1, 9 (1st Cir. 2008). 

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this Agreement.” Obviously, the phrase “relating to, arising 2

under, connected with, or incident to this Agreement” covers a lot

more ground than “terms of this Agreement,” and the textual

contrast within the one contract paragraph makes a rather forceful

case for reading “terms” as “written terms” and leaving the law

governing other issues (like statutory post-termination

obligations) untouched by the contracting parties. This reading is

also consistent with Jacobson v. Mailboxes Etc. U.S.A., Inc., 419

Mass. 572, 580 n.9, 646 N.E.2d 741, 746 n.9 (1995), in which the

Supreme Judicial Court of Massachusetts explained that a choice of

law provision stating “only that the agreement is to be governed

and construed by California law . . . does not purport to bar the

application of [Massachusetts statutory law] to the parties’

dealings.”3

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The choice of law provision here does not bar application

of the Georgia statute and therefore does not constitute a

contractual waiver by Vertex of its provision. This leaves open

the question whether a Massachusetts court would, in the absence of

a contractual waiver, recognize and enforce the Georgia statute, a

question involving Massachusetts choice of law principles and the

related questions of how it might construe and what effect it might

give to the Georgia statute’s anti-waiver provisions. Although

technically we do not defer to a district court on the meaning of

the law of the state in which it sits, we nevertheless think it

would be helpful for the district court to consider this set of

issues in the first instance, possibly aided by more complete

briefing in light of our resolution of the main issue decided by

the district court. To allow for that consideration, we vacate the

order of summary judgment for Paradigm on the Georgia statutory

claim and remand the case to the district court. Costs are taxed

in favor of Vertex Surgical, Inc.

So ordered.

Case: 09-1934 Document: 00116095301 Page: 6 Date Filed: 08/04/2010 Entry ID: 5468166