United States Court of Appeals

For the First Circuit

Nos. 10-1305, 10-2432 

THE CAPABILITY GROUP, INC.,

Plaintiff, Appellant,

v.

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,

Defendant, Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

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

Before

 Torruella, Boudin and Thompson,

Circuit Judges.

Peter A. Biagetti with whom Amanda B. Carozza and Mintz,

Levin, Cohn, Ferris, Glovsky & Popeo, P.C. were on brief for

appellant.

John F. Farraher, Jr. with whom Zachary C. Kleinsasser, Louis

Smith and Greenberg Traurig, LLP were on brief for appellee.

September 9, 2011
BOUDIN, Circuit Judge. This appeal arises out of a

contract dispute between two companies: American Express Travel

Related Services Company, Inc. ("AmEx") and The Capability Group,

Inc. ("Capability"). AmEx is in the business of global payments

and travel services, while Capability trains other companies in a

method of increasing business efficiency called Six Sigma. The

lawsuit, brought by Capability against AmEx, was resolved in the

latter's favor on summary judgment.

Six Sigma, broadly speaking, is a business management

approach that aims at improving outputs using certain quality

control and statistical techniques. See generally Newcombe, Law

Firm Convergence Meets Six Sigma, Of Couns., May 2007, at 7 (2007). 

It can be adapted to many industries and embodied in training

materials directed to a specific company's business operations. 

Six Sigma has been used by various consultants and companies for

several decades.

In the late 1990s, AmEx was assisted by another Six Sigma

consultant who in turn used Capability as a sub-contractor. After

this initial exposure to Capability, AmEx contracted directly with

Capability to provide Sigma Six training and related materials to

AmEx employees. The agreement, entered into on August 14, 2000,

and later amended, promised Capability (1) a guaranteed, fixed base

compensation of $4 million, and (2) a "gain sharing fee" to be paid

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only if AmEx surpassed savings in calendar year 2001 of $106

million as a result of Capability's work.1

AmEx's Global Six Sigma Performance Group ("Performance

Group") was responsible for tracking and for assisting with

implementation of Six Sigma projects across the company. Janet

Young headed the Performance Group, which comprised about 25-30

employees, and David Hudson, another Performance Group employee,

created a database that tracked financial and other project

information supplied by each project team for all of the hundreds

of Six Sigma projects at AmEx.

In September 2000, Capability hired a consultant--BGM

Services, Inc. and its principal Arthur Zentner-–to assist with the

development of course materials and training, and in the same month

Capability and BGM offered the first training course. Capability

completed its work under the agreement by December 31, 2001. There

was little discussion between Capability and AmEx as to the results

of the savings tracking until rather late in the process, but a few

clues could have encouraged optimism on Capability's part starting

in mid-2001.

The agreement provided: "As additional compensation

1

hereunder, [AmEx] agrees to pay [Capability] an additional fee

("gain sharing") based on the calculated benefit of the net savings

to [AmEx], its parent or affiliates realized during calendar year

2001 resulting from the materials, training, coaching and

development of personnel contemplated by this Agreement. The

additional gain sharing payment will be calculated as set forth in

this Section 8 and on Exhibit E." All of the pertinent provisions

are in an addendum to this decision.

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In August 2001 Zentner participated in a monthly

conference call with AmEx and Capability personnel and heard an

AmEx employee comment in substance that "the savings target was

achieved," which Zentner took to mean that AmEx had reached $106

million in savings. In mid-December 2001, Janet Young sent an email to Kevin Weiss, the CEO of Capability, relating in part to the

gain sharing fee calculation; it included the statement: "Current

projected Net Savings as of November, 2001: $102mm. Final

calculation to be completed Dec. 31, 2001."

A couple of months later, after AmEx computed the final

net savings at around $90 million, Young supplied Capability

savings reports showing gross savings of $149 million, and a

spreadsheet file titled "Final-TCG Contract Pay-out Final gain

share analysis" that explained the $90 million net figure--but a

second, never fully explained worksheet contained different numbers

and specified a net savings figure of over $107 million.

In the same time frame, Capability raised questions as to

whether AmEx was fully complying with confidentiality provisions in

the contract designed to protect Capability's training materials. 

One alleged breach concerned an IBM contractor who refused to sign

a confidentiality agreement before being trained with protected

materials, and another involved a third-party vendor to AmEx, The

Quality Group, that incorporated protected information into an

online demonstration product.

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On November 5, 2002, Capability rejected AmEx's

calculations as inconsistent with the agreement, demanded an

explanation for the conflicting spreadsheets, and asserted

knowledge of new confidentiality violations related to five former

AmEx employees taking confidential materials with them to new jobs. 

AmEx responded in March 2003 that it stood by its calculations and

methodolody, dismissing the second spreadsheet as a draft.

Following a nearly five-year hiatus, Capability filed

suit against AmEx on January 29, 2008. In Count I, the complaint

charged breach of contract based both on the failure to pay a gain

sharing fee and on alleged breaches of the confidentiality

provisions. Count II sought an accounting for disclosures or uses

of the Capability materials inconsistent with the copyright license

provided by the agreement. After discovery, the district court

granted AmEx summary judgment on both counts.

Starting with the gain sharing fee, the district court

ruled that the contract was unambiguous, that the gross savings

figure generated by the system was not decisive because a net

figure was contemplated, and that Capability had failed to show

that the $90 million net calculation was erroneous. As to

confidentiality breaches, the court found that they were largely

minor or technical, and that no damages had been established. It

also rejected the copyright claim on limitations grounds, and

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Capability appealed only from the judgment rejecting the contract

claim.

While that appeal was pending, Capability moved for

relief from judgment in the district court, Fed. R. Civ. P. 60(b),

arguing that its attorney's poor performance and suspension from

practice shortly after summary judgment proceedings justified

relief. After a hearing, the district court denied Capability's

motion, and Capability timely appealed from that order. We

consolidated the two appeals and now affirm.

The standard of review on summary judgment is de novo,

drawing inferences in favor of the non-moving party. LandrauRomero v. Banco Popular de P.R., 212 F.3d 607, 611 (1st Cir. 2000). 

The contract provides that New York law governs its interpretation. 

Review of an order denying a post-trial motion under Rule 60(b) is

for abuse of discretion, Karak v. Bursaw Oil Corp., 288 F.3d 15, 19

(1st Cir. 2002), which in practice means de novo review of strictly

legal determinations and deference to the extent that the denial

turns on factual or judgmental determinations. 

The gain sharing fee. Capability first argues that the

agreement unambiguously required AmEx to use the $149 million

savings figure reported by its internal savings system--without

subtraction of savings not attributable to Capability's Six Sigma

efforts--as the trigger for additional payment. Capability does

not, however, dispute that the $149 million figure included savings

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from 715 Six Sigma projects, some of which were unrelated to

Capability's own work, and failed to exclude certain costs of

implementing the Six Sigma program.2

Capability's most far-reaching argument for rejecting the

net $90 million figure is that the agreement implicitly required

use of the gross figure because (1) it provided that the

calculations derived from AmEx's system would be determinative, and

(2) no further massaging of numbers was permitted. The first

proposition is true but not the second. The argument emphasizes

the underscored language in the agreement:

The gain sharing shall be determined by [AmEx]

using the system it uses itself to internally

track and report on such savings for internal

business purposes. [AmEx] will provide

regular reports off of this system to

[Capability], redacting any confidential

information as appropriate. The savings

calculations from [AmEx's] system shall be

determinative and not subject to challenge by

[Capability].

But this language must be read together with the

agreement's gain sharing provision. It explicitly provides that

the gain sharing fee is to be "based on the calculated benefit of

the net savings to [AmEx] . . . resulting from the materials,

The record shows that the $149 million was reduced to $90 2

million by subtracting: $43,502,206 in savings from projects that

Janet Young's team determined were not connected in any manner with

Capability's work; $7,131,946 in savings from projects completed

before November 2000 (because the first Capability training course

was not completed until December 2000); and $8.1 million in program

operating costs and vendor payments.

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training, coaching and development of personnel contemplated by

[the] Agreement." See note 1, above (emphasis added). Exhibit E,

cross-referenced in this provision, also refers to "realized actual

net savings."

Nor is the language relied on by Capability inconsistent

with AmEx's derivation of the net figure. AmEx's calculation did

"us[e] the system" to generate a number that reflected actual net

savings "shown on" and "from" the system. It then permissibly

removed other savings "shown on" and "from" the system unrelated to

Capability's work and--consistent with the aim of deriving a final

net number--it reduced the relevant savings by the costs of

implementing the Six Sigma program. 

Capability points to the second sentence of the excerpt

quoted above, saying that the requirement of regular reports

generated by the AmEx system would be meaningless if the numbers in

those reports did not establish the final figure. But Capability

had good reasons to monitor the changing gross savings as they were

reported, and to insist that the final reported number be a

starting point for calculations, even though the final net numbers

might be determined only later in the day. 

Capability's fallback position is to argue first that at

least the agreement should be taken to be ambiguous, permitting

consideration of parol evidence. The parol evidence rule does

invite resort to extrinsic evidence, such as negotiations between

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the parties, where a contract's terms are unclear. But here there

is nothing ambiguous in the agreement's explicit specification of

net savings resulting from Capability's contribution. E.g.,

Teitelbaum Holdings, Ltd. v. Gold, 396 N.E.2d 1029, 1031 (N.Y.

1979). 

Capability also argues that it was a shared purpose of

the parties to achieve savings of $106 million. That figure was

certainly an objective; but it is also evident that AmEx intended

to limit its payment to Capability if that goal was not achieved. 

Nor is it apparent why Capability should expect to receive a

performance-based payment for $59 million in savings unrelated to

its own work under the contract. 

Capability's final fallback argument is that there was at

least a material issue of fact as to the correctness of the

subtractions, and this in turn necessarily generated material

issues of fact precluding summary judgment. This would indeed be

a promising line of attack if Capability had attempted to identify

evidence at the summary judgment stage that any one of the

individual components of any of the subtracted figures--for

example, a subtracted project that reduced the net savings--did

result from use of Capability's training or materials.

Capability points us to no such evidence. Instead,

Capability chooses to argue that the overall correctness of the $90

million calculation is globally impeached not by particular errors

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but by three pieces of evidence already adverted to: an AmEx

employee's statement during a conference call in August 2001, Janet

Young's December 12, 2001, e-mail, and the second spreadsheet that

identified $107 million in savings.

As already noted, Zentner testified at his deposition

that during a conference call with AmEx, he heard an AmEx employee

comment to the effect that "the savings target was achieved." But

the call was among Six Sigma representatives from across AmEx,

which had its own internal savings target, and the vague comment

left unstated which "target" the employee was referring to--not to

mention leaving unclear whether the savings were projected or

actual and whether they were gross or net. 

As for Young's e-mail, the sentence to which Capability

points--"[c]urrent projected Net Savings as of November, 2001: $102

mm"--expressly cautioned that it was a projection, i.e., estimate,

and came immediately after a warning that AmEx was in the process

of adjusting savings projections as a result of the events of

September 11, 2001. Capability was free to explore in discovery

how the estimate was altered by events and the revising-down

process; if it did so, nothing helpful to Capability has been

called to our attention. 

As for the mysterious $107 million spreadsheet, AmEx

produced admissible evidence identifying the $90 million

spreadsheet as the final calculation and explaining how it

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conducted its analysis in arriving at that figure. Despite

discovery, Capability has failed to adduce any meaningful evidence

refuting the propriety of Capability's calculations or showing that

the $107 million spreadsheet was the final version rather than some

interim or incomplete calculation or projection.

Its closest attempt is a strained reading of a footnote

in the $90 million spreadsheet that identified a large deduction as

"categorized under a subset of Six Sigma unrelated to

[Capability's] work but tracked via [AmEx's] system." Capability

wishfully suggests that anything under the banner of Six Sigma had

to be credited toward the gain sharing fee, regardless of whether

it derived from Capability's work. This misreads the agreement for

reasons already explained.

In its reply brief, Capability for the first time

stresses that AmEx's spreadsheet describes the starting $149

million savings figure as being "net of costs to implement,"

arguing that this is inconsistent with an additional subtraction

for $8.1 million in program costs; but the uncontradicted evidence

from Janet Young's deposition was that the $149 million figure was

net of "project cost[s] for individual projects," not overarching

costs such as operating the Performance Group itself.

The reply brief also contends that an internal AmEx

memorandum represents a fourth piece of evidence creating a genuine

issue of material fact in stating, "Through the third quarter, we

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already exceeded our goal of delivering $100 million in benefits

for the year with 293 completed Six Sigma projects across the

company." Nothing indicates that this is a net figure reflecting

only Capability-assisted projects. 

Confidentiality claims. Capability also appeals from

summary judgment on its contract claim based on the agreement's

confidentiality provisions. One such provision gave AmEx a license

to distribute and use the materials created under the agreement 

for training AmEx employees as well as "contractors and consultants

who [AmEx] determines are integral to [AmEx] business initiatives,"

provided that the latter and their employers also sign

confidentiality agreements restricting their use of the materials. 

The alleged breaches consisted of distributing

confidential materials to contractors and consultants who had not

signed, or whose employers had not signed, confidentiality

agreements; allowing former employees to retain materials after

they left AmEx; and permitting an unauthorized third-party company,

The Quality Group, to use and distribute the materials. AmEx

virtually concedes that it had in some instances not properly

policed its materials or obtained the proper signatures.

However, AmEx also asserts that the breaches were minor,

that none of the materials are now being distributed outside the

company or have been since 2005, and that Capability has not been

damaged in any of the episodes. The district judge agreed and, as

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to The Quality Group's arguable unauthorized use, found that a May

2005 license by Capability granted The Quality Group use of the

material in exchange for a fee paid to Capability.

Capability's position is that the materials had inherent

value evidenced by AmEx's payments to Capability under the

contract; and so, Capability asserts, a jury could conclude that

but for AmEx's failure to secure confidentiality agreements, the

recipient companies would otherwise have paid Capability for the

right to use the materials. But the materials were furnished to

help these third parties in AmEx's business and were not otherwise

used. 

The one exception--The Quality Group's incorporation of

protected materials into an online demonstration product--was

ultimately covered by a license and license fee. It appears from

the license agreement that it covered The Quality Group's prelicense uses and, in any event, Capability does not suggest

otherwise. Thus, the district judge correctly concluded that it

would be double recovery to require any payment from AmEx on

account of this episode.

The contract also stipulated that breaching the

confidentiality provisions would amount to "irreparable and

continuing damage or injury" entitling the nonbreaching party to

request an injunction, as well as attorneys' fees incurred for that

purpose. Capability claimed in the district court that it is

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entitled to both an injunction and fees, but the district court

found that no further threat of improper disclosure existed, AmEx

having long since ceased providing the materials to outsiders.

Although Capability still insists that it is entitled to

the injunction even without such a threat, injunctions are almost

always discretionary exercises of the court's equity powers, and

are rarely warranted where no threat of future harm exists. The 3

agreement's language might suffice to avoid proof of irreparable

injury in the case of continuing disclosure, but the parties have

no power to compel a court to grant equitable relief that the court

finds to be unnecessary. E.g., Fireman's Ins. Co. of Newark, N.J.

v. Keating, 753 F. Supp. 1146, 1154 (S.D.N.Y. 1990).

Capability's Rule 60(b) motion. Capability sought by

post-judgment motion, Fed. R. Civ. P. 60(b), and the district court

denied, relief from the judgment on the grounds that its own trial

attorney's negligence and misconduct (counsel was replaced for the

appeal) denied it an opportunity to fully litigate its claims. 

Capability contended that its trial attorney was suffering through

Goodwin v. C.N.J., Inc., 436 F.3d 44, 49 (1st Cir. 2006) (an 3

injunction is inappropriate when "intervening events have

eliminated any reasonable anticipation that the aggrieved party

will, in the future, be faced with a recurrence of the alleged

harm"); accord Coady Corp. v. Toyota Motor Distribs., Inc., 361

F.3d 50, 61 (1st Cir. 2004) ("[I]njunctions are normally a matter

of equity and the court is not required to waste resources where

there is no ongoing harm and reasonable threat of recurrence.").

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personal and family distractions, undisclosed to Capability, that

compromised his ability to conduct the lawsuit. 

On this appeal, Capability says that the denial of such

relief was error. In civil cases, inadequate representation is

normally a matter to be resolved between the attorney and his

client, cf. Dávila-Álvarez v. Escuela de Medicina Universidad

Central del Caribe, 257 F.3d 58, 66 (1st Cir. 2001), but perhaps in

unusual circumstances it could be a basis for Rule 60(b) relief. 

See Chang v. Smith, 778 F.2d 83, 85 (1st Cir. 1985) (reserving the

question). But at a minimum this would require both incompetent

performance that the client could not have forestalled and a

showing of likely prejudice.

Without describing the travails of Capability's former

counsel in any detail, we will assume arguendo that his performance

was seriously compromised by circumstances not disclosed to his

client. But Capability's Rule 60(b) motion failed to show that

superior representation would likely have altered the result. On

the contrary, nothing in the four pieces of omitted evidence now

identified by Capability suggests that, singly or together, the

outcome might have been different.

Capability first says its then counsel should have told

the court the identity of the AmEx employee, Mark LeFort, who

commented during the August 2001 conference call with Zentner that

"the savings target was achieved"; but as already explained, the

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remark is too murky to reinforce Capability's case regardless of

who made it. The second piece of evidence allegedly overlooked by

counsel, an internal AmEx memorandum referencing third-quarter

savings, is (as we have said) similarly imprecise.

The last two items, an e-mail from AmEx to Capability

containing discussion points for the contract negotiations and an

internal AmEx PowerPoint presentation bearing on AmEx's internal

savings goals, are also of no help to Capability. They are

advanced as parol evidence of the parties' intentions as to how the

agreement's gain sharing provisions should be read. But, as we

have already explained, parol evidence was not admissible to

contradict the unambiguous contract language.

True enough, cases often repeat the canonical language--

strictures against parol evidence to contradict unambiguous

language--while sometimes seeming to find ambiguities in part

because the parol evidence is itself so powerful. None of the

evidence identified by Capability, whether cited to the district

court originally or only in the Rule 60(b) motion, rises to this

level. The denial of Rule 60(b) relief was not an abuse of

discretion.

Affirmed.

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ADDENDUM

Gain Sharing Provisions:

[8]c. Gain Sharing. As additional

compensation hereunder, [AmEx] agrees to pay

[Capability] an additional fee ("gain

sharing") based on the calculated benefit of

the net savings to [AmEx], its parent or

affiliates realized during calendar year 2001

resulting from the materials, training,

coaching and development of personnel

contemplated by this Agreement. The

additional gain sharing payment will be

calculated as set forth in this Section 8 and

on Exhibit E.

(1) The gain sharing shall be determined

by [AmEx] using the system it uses itself to

internally track and report on such savings

for internal business purposes. [AmEx] will

provide regular reports off of this system to

[Capability], redacting any confidential

information as appropriate. The savings

calculations from [AmEx's] system shall be

determinative and not subject to challenge by

[Capability].

***

Exhibit E

A gain sharing payment will be made in

addition to the base compensation provided

for above if realized actual net savings

during the calendar Year 2001 equals or

exceeds $106 million. If this threshold is

not met, no gain sharing payment will be due.

No gain sharing payment will be made in

connection with anticipated savings or

savings not realized during the calendar year

2001.

If [AmEx's] actual net savings shown on

[AmEx's] tracking system described in Section

8.c.1 of this Agreement realized during the

calendar year 2001 equals or exceeds $106

million, [AmEx] will pay [Capability] a gain

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sharing payment equal to $1 million plus 10%

of the amount by which such actual net

savings realized during the calendar year

2001 exceed $106 million; provided however,

that in no event will the total gain sharing

payment made under this Agreement exceed $3

million.

Confidentiality Provisions:

[5]b. License to [AmEx]. [Capability] hereby

grants to [AmEx] a perpetual, irrevocable

(subject to release by [AmEx] only under the

circumstances provided in Section 9.f hereof,

nonexclusive, nontransferable, worldwide

license under [Capability's] copyright,

patent, trade secret rights, trade name,

and/or service mark to use the Course

Materials, in any and all media forms, for

the sole and express limited purpose of

[AmEx] utilization for training as provided

herein. No licenses under any other trade

secrets, patents, copyrights, mask works,

trademarks, or other intellectual property

rights other than the Course Materials are

granted. The license authorizes [AmEx] (i)

during or after the term of this Agreement,

to use, make ongoing changes to, and

distribute the Course Materials and to

provide associated training internally to its

employees, affiliates, and employees of its

affiliates; (ii) during and after the term of

this Agreement, to use, make ongoing changes

to, and distribute the Course Materials and

to provide associated training to contractors

and consultants who [AmEx] determines are

integral to [AmEx] business initiatives where

the quality tools and process improvement

philosophy are being deployed, provided that

the employers of any such contractors and

consultants, and the contractors and

consultants themselves, sign Confidentiality

Agreements substantially in the forms set

forth in Exhibits G and H hereto prior to

receiving the Course Materials or

participating in the training . . . .

***

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[9]g. Breach Involving Confidential

Information. As set forth in Section 4

hereof, both parties acknowledge that the

information, including, but not limited to

the format, structure, analysis, materials

and techniques that are integral to the

Course Materials, and the content of the

Custom Course Materials and the [AmEx]

Process Improvement Course Materials is

confidential and to the extent, and as set

forth in this Agreement, the property of each

respective party as allocated herein. 

Accordingly, each party recognizes and agrees

that their compliance with the covenants and

agreements contained in this Agreement are

reasonable and necessary for the protection

of parties' rights. Each party recognizes

and agrees that any violation of any of the

covenants and agreements contained in this

agreement will cause irreparable and

continuing damage or injury to the other

party, the exact amount of which would be

difficult to ascertain and for which there

may be no adequate remedy at law, and that,

for such reasons, among others, each

respective party shall be entitled, as a

matter of course, to request an injunction

from any court of competent jurisdiction

restraining any further such violation as

well as recovery from the other party of any

and all costs and expenses sustained or

incurred by the complaining party in

obtaining such an injunction, including

without limitation reasonable attorneys'

fees. Such right to request an injunction

(and to recover such costs and expenses)

shall be cumulative and in addition to any

other rights and remedies to which the

complaining party may be entitled.

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