United States District Court, D. New Hampshire
MEMORANDUM AND ORDER
J. Barbadoro, United States District Judge.
Baker has sued Paul Montrone, Paul Meister, Perspecta
Holdings LLC, and several related entities. His principal
claims are based on the Americans with Disabilities Act of
1990 (“ADA”), 42 U.S.C. § 12101 et seq., and
the New Hampshire Law Against Discrimination, N.H. Rev. Stat.
Ann. § 354-A (“Section 354-A”). This
Memorandum and Order addresses defendants' motion to
compel arbitration of Baker's companion claims for
fraudulent inducement, breach of fiduciary duty, unjust
enrichment, and breach of contract.
STANDARD OF REVIEW
First Circuit Court of Appeals has yet to identify the proper
standard of review for a motion to compel arbitration.
Landry v. Time Warner Cable, Inc., No. 16-cv-507-SM,
2018 WL 4697578, at *1 (D.N.H. Sept. 27, 2018) (citing
Pla-Fit Franchise, LLC v. Patricko, Inc., No.
13-cv-489-PB, 2014 WL 2106555, at *3 (D.N.H. May 20, 2014)).
In my view, “[i]f the answer is apparent on the face of
the complaint, the Rule 12(b)(6) standard will suffice. If
the court must consult evidence to resolve the issue, the
summary judgment standard must be employed.” Pla-Fit
Franchise, 2014 WL 2106555, at *3 (citing Guidotti v.
Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764,
773-74 (3d Cir. 2013)). Defendants' motion turns
primarily on evidence that a court ordinarily may consider in
resolving a Rule 12(b)(6) motion: namely, allegations made in
the complaint and statements made in other documents
referenced therein, such as incorporation documents and
contracts. See Wilson v. HSBC Mortg. Servs.,
Inc., 744 F.3d 1, 7 (1st Cir. 2014). Accordingly, I
employ the Rule 12(b)(6) standard.
survive a Rule 12(b)(6) motion, a plaintiff must allege
sufficient facts to “state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Because,
however, defendants' arbitration demand must be treated
as an affirmative defense, see Sevinor v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 807 F.2d 16, 19 (1st
Cir. 1986), they are entitled to prevail only if the facts
establishing their right to arbitration are clear on the face
of the complaint and any other documents that a court may
consider when ruling on a Rule 12(b)(6) motion. See Zenon
v. Guzman, 924 F.3d 611, 616 (1st Cir. 2019) (applying
Rule 12(b)(6) standard to an affirmative defense). In
resolving the motion, I assume the truth of Baker's well
pleaded factual assertions and view the facts in the light
most favorable to him. See Germanowski v. Harris,
854 F.3d 68, 71 (1st Cir. 2017).
addition to Montrone, Meister, and Perspecta Holdings, Baker
has sued five other interrelated entities: Bayberry Financial
Services Corp., Liberty Lane Services Company LLC, Perspecta
Trust LLC, Perspecta Entities LLC, and Perspecta Investments
LLC. Am. Compl., Doc. No. 30 at 1. I begin by describing the
relationships among the institutional defendants and then
turn to the agreements that serve as the basis for
defendants' demand for arbitration.
and Montrone directly or indirectly control all of the
institutional defendants. Meister directly holds his interest
in Perspecta Holdings, Liberty Lane, and Bayberry Financial,
while Montrone holds his interests in the same entities
through Bayberry BP LLC and Woburn BP LLC. Doc. No. 30 at 4;
Perspecta Holdings LLC Equity Award and Admission Agreement,
Doc. No. 35-3 at 14. Perspecta Holdings, in turn, holds
controlling interests in Perspecta Trust, Perspecta Entities,
and Perspecta Investments. Perspecta Entities LLC Agreement,
Doc. No. 35-8 at 56; Perspecta Investments LLC Agreement,
Doc. No. 35-12 at 56. Baker's employment discrimination
claims arise from his joint employment as
“Principal” and later as President of Perspecta
Trust, Liberty Lane, and Bayberry Financial (collectively
“Perspecta”). Doc. No. 30 at 4. His common law
claims arise from a 2012 Equity Award and Admission Agreement
(“2012 Equity Agreement”) between Baker and
Perspecta Holdings, Doc. No. 35-3, and 2016 Profit Interest
and Equity Award Agreements between Baker and Perspecta
Entities and Baker and Perspecta Investments (collectively
“2016 Equity Agreements”), Doc. No. 35-7, Doc.
No. 35-11. The relationships among the parties, as Baker
describes them, are depicted in the diagram attached to this
Memorandum and Order as Exhibit A.
Initial Hiring and Employment
was hired to work at Perspecta in 2009. Doc. No. 30 at 3-4.
Throughout his employment, Baker reported to Montrone and
Meister - Perspecta's co-founders and managers. Doc. No.
30 at 5. In addition to a base salary and a bonus,
Baker's offer of employment included a promise that
“on [his] start date, [he would] initially be awarded
stock options representing 3% of the equity in Perspecta over
and above a base starting value of $15, 000, 000 . . . [and
that a]dditional grants would be considered in the future on
a periodic basis as recommended by the Compensation
Committee.” Doc. No. 30 at 3. Notwithstanding this
promise, Baker did not receive an equity interest in
Perspecta or any related business until 2012. Doc. No. 30 at
entered into the 2012 Equity Agreement with Perspecta
Holdings on July 2, 2012. Doc. No. 35-3 at 2. The
Company's Limited Liability Company Agreement recognizes
two classes of membership interests that are referred to as
“Class A Units” and “Class B Units.”
Doc. No. 35-4 at 19. Class A Units represent capital
interests and Class B Units represent profit interests. Doc.
No. 35-4 at 19. The 2012 Equity Agreement granted Baker
sufficient Class B Units to give him a right to 20% of
Perspecta Holdings' profits when the units became fully
vested. Doc. No. 35-3 at 14. One thousand of Baker's
Class B units vested immediately upon execution of the
Agreement, with the remainder vesting at a rate of 500 units
annually until his interest fully vested on January 1, 2015.
Doc. No. 35-3 at 3.
entering into the 2012 Equity Agreement, Baker also became a
party to the Perspecta Holdings Limited Liability Company
Agreement. Doc. No. 35-3 at 2. That agreement includes the
following arbitration clause (“2012 Arbitration
In the event of any controversy between the parties as to the
enforcement or interpretation of the terms and provisions of
this Agreement, including the right to recover payments due
hereunder, such controversy shall be determined by binding
arbitration. . . .
Doc. No. 35-4 at 36. The LLC Agreement also defines
This Limited Liability Company Agreement including all
Admission Agreements and amendments adopted in accordance
with the Agreement and the [Delaware Limited Liability
Doc. No. 35-4 at 4. Accordingly, disputes between the parties
concerning the enforcement or interpretation of the 2012
Equity Agreement are subject to the 2012 Arbitration Clause
because the Equity Agreement is an “Admission
Agreement.” Doc. No. 35-3 at 2.
2012 Equity Agreement permitted Perspecta Holdings to
repurchase units awarded to Baker at a defined
“Repurchase Value” if Baker's employment were
terminated. Doc. No. 35-3 at 3-4. Baker, in turn, was
entitled under a “Put Right” provision to require
Perspecta Holdings to repurchase his units at a specified
percentage of the Repurchase Value, which varied depending
upon when the repurchase occurred. Doc. No. 35-3 at 7.
Restructuring of Baker's Interest
2015, Montrone informed Baker that the 2012 Equity Agreement
would be terminated and replaced with a new and “much
better” agreement. Doc. No. 30 at 8. In fact, however,
Meister and Montrone intended that the new agreement would
“purposely decrease the value of Baker's stake in
Perspecta in anticipation of a planned, but undisclosed
termination.” Doc. No. 30 at 15.
restructuring that eventually occurred took place in two
phases: (1) a redemption of Baker's interest in Perspecta
Holdings, negotiated in 2015 and effective January 1, 2016
(the “2015 Redemption Agreement”); and (2) an
award of profit interests in Perspecta Entities and Perspecta
Investments on December 1, 2016 pursuant to the 2016 Equity
Holdings and Baker agreed in the Redemption Agreement that
the company would redeem Baker's interest in Perspecta
Holdings for $886, 000. Defs.' Mem. of Law in Support of
Mot. to Compel Arbitration, Doc. No. 35-1 at 2. Neither party
alleges that the redemption was triggered by either of the
events prescribed by the 2012 Equity Agreement (namely,
Baker's termination or a “Put Right”
redemption initiated by Baker). Rather, the redemption was
the product of an independent agreement between Montrone and
Meister (as managers of Perspecta Holdings) and Baker. Doc.
No. 35-1 at 2.
alleges that the redemption price received for his interest
in Perspecta Holdings was “unreasonably low.”
Doc. No. 30 at 16. He states that he knew at the time that
the price was low, but that he relied upon Montrone's
representations that he would not be harmed by the low
redemption price because his new equity award would be
“much better.” Doc. No. 30 at 16. Specifically,
Baker was told that the award would give him “true
equity” and be more similar to the equity plans used by
another related entity, Ballentine Partners. Doc. No. 30 at
15. Baker understood this to mean that his Class B profit
interests would be replaced with Class A capital interests.
Doc. No. 30 at 15. Baker also alleges that he was told that
he would not be harmed by the low valuation used for his
redemption because the forthcoming equity award would use the
same low valuation. Doc. No. 30 at 26. Baker claims that he
relied on ...