Opinion ID: 4076467
Heading Depth: 4
Heading Rank: 2

Heading: 2003 Avaya One Agreement

Text: The choice of law clause in the Avaya One agreement, § 18.1, provides that New York law governs. Under New York law, the elements of a breach of contract claim are similar to Delaware’s: “[1] the existence of a contract, [2] the plaintiff’s performance pursuant to the contract, [3] the 63 defendant’s breach of his or her contractual obligations, and [4] damages resulting from the breach.” Neckles Builders, Inc. v. Turner, 986 N.Y.S. 2d 494, 496 (N.Y. App. Div. 2014). The signature page of the Avaya One agreement evidences a contract between Avaya and TLI, satisfying the first element. Section 7.3 of the Avaya One agreement provides, in part, as follows: [TLI] agrees not to reverse engineer, decompile or disassemble software furnished to it in object code form or permit any third party to do so. For any software included as part of the Licensed Materials which inherently includes the capability of being remotely enabled, [TLI] expressly agrees that it shall not enable, or permit or assist any third party to enable, such features or capabilities without Avaya’s express written permission.33 (J.A. 6953.) That obligation was clearly intended to survive the termination of the Avaya One agreement.34 Both an 33 As an Avaya executive testified at trial, the purpose of that provision was “to protect [Avaya’s] software assets going forward if there is information that a Business Partner gets, [and] also to make sure that nothing gets turned on subsequent[ to] termination.” (J.A. 2116.) 34 Section 17.6 of the agreement provided that “the termination of the Agreement shall not prejudice or otherwise affect ... any ... obligations of the parties, such as those arising 64 Avaya executive and a systems engineer testified that MSPs and the DADMIN logins were capable of being remotely enabled. The agreement also included, at § 4.1, a general morality clause that bound TLI for the duration of the agreement: [TLI] shall: (a) conduct its business in a manner that reflects favorably on the Products and on the good name, goodwill and reputation of Avaya; (b) avoid deception, misleading or unethical practices; and (c) use best efforts to promote, market, and further the interest of Avaya, its name and Products. (J.A. 6951 (emphases added).) Although Avaya’s performance – the second element of a breach of contract claim – was not part of the District Court’s analysis, the record provides sufficient evidence for a jury to conclude that Avaya did perform. TLI was operating as a Business Partner under the Avaya One agreement from its execution until the business relationship between the parties was terminated. Douglas Graham acknowledged that the relationship was “mutually beneficial” and that, “[a]s an Avaya Business Partner ... TLI was authorized by Avaya to resell certain Avaya products and services.” (J.A. 2699.) under [Section 7], which by their nature continue beyond termination of the Agreement and which shall survive such termination.” (J.A. 6959.) 65 Indeed, Avaya equipment was “by far [the] leading manufacturer product that [TLI] sold.” (J.A. 2700.) The District Court’s analysis focused on the third element – the actual breach of a contractual obligation. Avaya’s claim for breach of § 7.3 is straightforward. Insofar as MSPs and DADMINs were “licensed Materials which inherently include[d] the capability of being remotely enabled,” a jury could find that TLI breached its contractual obligations when it “enable[d] ... or assist[ed] any third party to enable, such features or capabilities without Avaya’s express written permission.” (J.A. 6953.) Even though the District Court acknowledged that the meaning of those terms was “less than perfectly clear,” it nonetheless concluded that the term “features and capabilities” unambiguously excluded MSPs and DADMIN logins. (J.A. 218-19.) Yet the activation of MSPs and use of DADMIN logins allowed customers to perform remote maintenance, for which customers were willing to pay additional licensing fees, suggesting that the customers considered them to be features or capabilities. Even if a reasonable jury could have agreed with the District Court’s reading of the contract, there was at least sufficient ambiguity in the Avaya One agreement that the jury could have seen it the other way and agreed with Avaya that MSPs and DADMIN logins are “features and capabilities,” the unauthorized activation of which by TLI amounted to a breach of contractual obligations. As to the morality clause in § 4.1, Avaya contended that TLI breached its obligations when it began its allegedly unethical business practices during the term of the contract, in preparation for soliciting maintenance customers away from Avaya. Those activities included hacking logins and enlisting 66 Business Partners to obtain ODMC access. As early as May 2003, while still bound by the Avaya One agreement, TLI solicited Creswick to “pull ... password[s].” (J.A. 2281.) In September, during the contract term, TLI began to seek a “discreet Avaya Business Partner ... [to] submit DADMIN request forms on our behalf.” (J.A. 5813.) A reasonable jury could have concluded that, by engaging Creswick and recruiting Business Partners to submit deceptive DADMIN login request forms, TLI was violating its contractual obligations to “avoid deception [and] misleading or unethical practices” and to “use best efforts to promote, market, and further the interest of Avaya.” (J.A. 6951.) Analysis of damages – the final element of the cause of action – was not central to the District Court’s grant of judgment as a matter of law. However, the analysis for damages is as straightforward as for the tort claims, because PBX and PDS maintenance business gained by TLI as a result of its breach must have come, to some extent, at Avaya’s expense.