Abdallah v. Bain Capital, LLC

United States Court of Appeals
For the First Circuit
No. 13-2008

MURIELLE ABDALLAH,
Plaintiff, Appellant,

v.

BAIN CAPITAL LLC,
Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

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

Before

Thompson, Circuit Judge,
Souter, Associate Justice,*
Kayatta, Circuit Judge.

Phillippe Jean Joseph Pradal and Timothy K. Cutler, with
whom Pradal & Associates, PLLC and Cutler & Wilensky LLP were on
brief, for appellant.
David Casey, with whom Christopher B. Kaczmarek and
Littler Mendelson, P.C. were on brief, for appellee.

June 3, 2014

*
Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
 KAYATTA, Circuit Judge. Plaintiff Murielle Abdallah and

the members of the class that she seeks to represent worked in a

luggage factory in Hénin-Beaumont, France. The factory was owned

by Samsonite, which was in turn controlled by an investment group

led by Bain Capital, LLC. In 2005, Samsonite sold the factory to

a thinly-capitalized third party, HB Group. In early 2007, a

French court ordered the liquidation of the factory, costing

Abdallah and her coworkers their jobs. HB Group had no resources

with which to pay Abdallah and her coworkers the post-termination

benefits to which they were entitled under French law. In 2012,

Abdallah commenced this putative class action, seeking to hold Bain

liable, under theories of tortious interference with employment

arrangements, fraud, negligent misrepresentation, and unjust

enrichment, for losses suffered by the factory's workers as a

result of the sale and liquidation, which Abdallah claims Bain

orchestrated. Pointing to the passage of over five years between

the liquidation of the factory and the commencement of this action,

and rejecting Abdallah's arguments for tolling the running of the

applicable three-year limitations period, the district court

dismissed the complaint. For the following reasons, we affirm.

I. Background

This case was dismissed under Federal Rule of Civil

Procedure 12(b)(6), before the parties could engage in the fact-

finding necessary to determine which side's versions of events is

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true. In describing the events giving rise to this case, we

therefore look to the allegations of the complaint, see

Rodríguez-Vives v. P.R. Firefighters Corps of P.R., 743 F.3d 278,

280 (1st Cir. 2014), as well as statements Abdallah admittedly made

in French proceedings as reflected in records from those

proceedings, the authenticity of which no party contests, see In re

Colonial Mortg. Bankers Corp., 324 F.3d 12, 16 (1st Cir. 2003)

(stating that a court may consider "matters of public record" when

dismissing a complaint on the basis of an affirmative defense);

Boateng v. InterAmerican Univ., Inc., 210 F.3d 56, 60 (1st Cir.

2000) (noting in dicta that "a court ordinarily may treat documents

from prior state court adjudications as public records"). In

reviewing all of these materials, we draw all reasonable inferences

in Abdallah's favor. See Rodríguez-Vives, 743 F.3d at 280.

In 2003 a group of investors led by Bain purchased for

$106,000,000 approximately 85 percent of Samsonite, which owned the

factory at issue in this case and employed more than 200 workers

there. Bain was then faced with a problem. It wanted to shut down

the factory, but, under French law, doing so would have required

Samsonite to pay between $75,000,000 and $120,000,000 to fund a

"collective redundancy plan" for the laid-off employees. Bain and

Samsonite avoided either making a massive severance payment or

retaining an unprofitable factory by hiring a third party to buy

the factory. To accomplish this, Samsonite formed a wholly owned

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subsidiary, which Abdallah refers to as NewCo, and transferred the

factory to it. Samsonite then sold NewCo to HB Group for one euro.

HB Group, in turn, was controlled by Jean-Jacques Aurel, an

entrepreneur who had been involved in a similar transaction

involving Samsonite's competitor, Delsey. Samsonite also paid

approximately €9,000,000 to HB Group, €1,000,000 of which was spent

on a "shareholder advance." Though HB Group told the factory

employees that the factory would be converted to the production of

solar panels, no solar panels were ever produced. NewCo filed for

bankruptcy less than a year later.

On February 15, 2007, after NewCo's bankruptcy, a French

court ordered the "judicial liquidation" of the factory. It

appears that this is the date on which the employment of Abdallah

and her coworkers formally terminated. With neither NewCo nor HB

Group able to provide the post-termination benefits required under

French law, Abdallah and her coworkers filed suit against Samsonite

and its shareholders, including Bain, in French civil court. In

the summer of 2007, meanwhile, Bain and the other investors sold

their interest in Samsonite to CVC Capital Partners for

$1,700,000,000.

In the French civil court proceeding, the plaintiffs

eventually secured a ruling canceling the sale of NewCo by

Samsonite to HB Group. During that litigation, Bain asserted that

it was "a stranger to the contracts and all the acts that pertained

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to the litigation." Based on this assertion, the French court

ultimately declared Bain "exterior to the annulment procedure."

After the civil court cancelled the sale of NewCo, the plaintiffs

obtained a ruling from a French labor court that Samsonite had

never stopped being their employer. The labor court found,

however, that it had no jurisdiction over Bain because of the civil

court's findings.

Meanwhile, Aurel, HB Group's principal, was criminally

prosecuted for fraud in France and sentenced to three years in

prison. In 2011, he provided an affidavit to Abdallah asserting

that a representative of Bain was present at Aurel's meetings with

Samsonite in which the scheme for the transfer of the factory was

hatched. Moreover, Aurel revealed, Samsonite's representative

repeatedly sought the assent of Bain's representative to the key

elements of the scheme. Abdallah claims that this 2011 affidavit

revealed to her for the first time that Bain directed the transfer

of the factory.

Unsatisfied with the remedies she had obtained in French

court against Samsonite, Abdallah then sued Bain in the United

States District Court for the District of Massachusetts in November

2011, alleging fraud, unjust enrichment, tortious interference with

employment agreements, and unfair business practices in violation

of Mass. Gen. Laws Ch. 93A § 2(a). Bain moved to dismiss

Abdallah's complaint, arguing that Abdallah's causes of action

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accrued when her employment formally terminated on February 15,

2007, and that her complaint was therefore barred by the applicable

statutes of limitation. Abdallah countered that, under various

tolling doctrines, the statutes of limitation on her causes of

action did not begin to run until 2011, when she learned from Aurel

the details of Bain's involvement in the factory's sale.

The district court (Tauro, J.) sided with Bain and

dismissed Abdallah's complaint without prejudice, making clear that

"[i]f additional facts regarding the information that came to light

in September 2011 would justify invoking [tolling doctrines],

Abdallah may refile a complaint . . . ." See Abdallah v. Bain

Capital LLC, 880 F. Supp. 2d 190, 199 (D. Mass. 2012). In October

2012, Abdallah filed a new complaint with additional details,

including some of the facts recounted in this opinion, about what

and when she knew of Bain's involvement in the sale of the factory.

The new complaint alleged tortious interference, fraud, negligent

misrepresentation and unjust enrichment. Because Abdallah filed a

new complaint rather than amending her previous one and, in

violation of Mass. Dist. Ct. Local Rule 40.1(G), failed to identify

the new case as related to the previous one, the clerk randomly

assigned the new case to Judge Woodlock rather than Judge Tauro.

See Abdallah v. Bain Capital LLC, No. 12-12027-DPW, 2013 WL

3491074, *1 & n.1 (D. Mass. July 9, 2013). After concluding that

the new facts alleged in the new complaint did not alter Judge

Tauro's conclusion, Judge Woodlock dismissed the case as barred by

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the three-year statute of limitations. Id. at *5. This appeal of

Judge Woodlock's judgment dismissing the case with prejudice

followed.

II. Standard of Review

When the allegations in a complaint show that the passage

of time between the events giving rise to the claim and the

commencement of the action exceeds the applicable limitations

period, a district court should grant a 12(b)(6) motion by the

defense if the complaint (and any other properly considered

documents) "fails to 'sketch a factual predicate' that would"

provide a basis for tolling the statute of limitations. Trans-Spec

Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 320 (1st Cir.

2008) (quoting LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507,

509–10 (1st Cir. 1998)).

In making such an assessment under Rule 12(b)(6), a

district court engages in no fact finding. Rather, it presumes

that the facts are as properly alleged by plaintiffs and/or

reflected in other properly considered records, with reasonable

inferences drawn in plaintiffs' favor. See, e.g., Schatz v.

Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012).

Our review of the district court's reading of the complaint and

associated records is de novo. Id. Similarly, to the extent that

the district court needed to consider issues of law (for example,

whether the complaint adequately alleges facts that would plausibly

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make out a claim for fraudulent concealment), our review of such

questions of law is also de novo. See, e.g., Simmons v. Galvin,

575 F.3d 24, 30 (1st Cir. 2009). Finally, our review of the

district court's judgment that the facts and law as so determined

did not warrant equitable relief is for abuse of discretion.

Rivera-Díaz v. Humana Ins. of Puerto Rico, Inc., No. 13-1475, 2014

WL 1395064, at *3 (1st Cir. Apr. 11, 2014).

III. Analysis

Abdallah does not dispute that, absent tolling, her claim

accrued on February 15, 2007, the date that the French court

ordered the judicial liquidation of the factory and Abdallah's job

loss became certain. She also does not dispute that her causes of

action are subject to a three-year statute of limitations under

Massachusetts law. See Mass. Gen. Laws ch. 260, § 2A.

Accordingly, this suit against Bain, which was commenced on October

30, 2012,1 must be dismissed as time barred unless there is a basis

to conclude that the statute of limitations was tolled. Abdallah

attempts to establish that tolling is appropriate using two

doctrines: fraudulent concealment and equitable tolling.

In Massachusetts, a statute of limitations can be tolled

because of fraudulent concealment if "'the wrongdoer . . .

concealed the existence of a cause of action through some

1
Abdallah did not appeal the dismissal of her first action
filed in November of 2011.

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affirmative act done with intent to deceive,'" but "'[t]he statute

of limitations . . . is not tolled if the plaintiff has actual

knowledge of the facts giving rise to his cause of action.'"

Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc.,

412 F.3d 215, 239 (1st Cir. 2005) (quoting Stark v. Advanced

Magnetics, Inc., 50 Mass. App. Ct. 226, 233-34 (2000)); see also

Mass. Gen. Laws ch. 260, § 12. The doctrine of equitable tolling

also provides no relief to a plaintiff who knows of facts

sufficient to bring the cause of action. Indeed, equitable tolling

only applies "if a plaintiff exercising reasonable diligence could

not have discovered information essential to the suit." Bernier v.

Upjohn Co., 144 F.3d 178, 180 (1st Cir. 1998) (citing Protective

Life Ins. Co. v. Sullivan, 425 Mass. 615, 631 (1997)).

To assess whether Abdallah knew so little before November

2009, so as to justify the tolling of the statutory limitations

period under either theory, we begin with the nature of the claims

she now seeks to press against Bain. All of her counts seek, in

substance and form, to hold Bain liable for the allegedly

fraudulent creation and sale of NewCo by Samsonite during the

period the Bain-led investor group owned a controlling stake in

Samsonite. She does not sue Bain for anything it did to her

directly. Rather, she seeks to hold Bain liable for Samsonite's

actions by alleging that Bain "not only interfered in the decision

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making of Samsonite but dictated Samsonite's actions when [it was]

negotiating with HB Group."

Abdallah knew well prior to 2009 precisely what Samsonite

had done, even to the point of securing rulings against Samsonite

in French courts in 2008. So the only remaining question is what

to make of Abdallah's claim that she did not know until after

November of 2009 that, as she now says she knows, Bain "dictated

Samsonite's actions." The answer to this question seems clear. It

took no imagination--or implausible allegation--to suggest that

Samsonite's owners must have authorized such a major and highly

visible financial transaction by the company they had just

acquired. In any event, Abdallah actually sued Bain in French

civil court at the time, explaining that she had "documents . . .

show[ing] that the shareholders of S[amsonite], especially through

the active brokerage of B[ain] . . . intervened directly in the

organization of the disputed operation." Similarly, she argued to

the French labor court in 2008 that "driven by its main

shareholders" (which she does not deny she knew included Bain)

"S[amsonite] . . . clearly abused its right to sell the factory,

and committed fraud." She explicitly alleged that Bain had

actually suggested to Samsonite the consultants and lawyers who put

together the fraudulent sale, based on prior similar work they had

done for another company.

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 Abdallah's first response to the foregoing recitation of

her knowledge in 2007 is procedural. For the first time on appeal,

she argues that the district court wrongly considered only the

portion of the French trial record that Bain provided with its

brief and not other portions of the record in French court.

Abdallah does not explain, however, why reviewing any of these

other documents would have shown that she did not know what the

excerpts upon which the district court relied show she knew. Nor

does she explain why she did not simply translate the documents and

provide that translation to the district court. Abdallah's

"perfunctory treatment," of the issue, "as well as [her] raising

this argument for the first time on appeal, waives" it. Randall v.

Laconia, NH, 679 F.3d 1, 5 (1st Cir. 2012); see also French v. Bank

of N. Y. Mellon, 729 F.3d 17, 21 n.2 (1st Cir. 2013) (treating as

waived issue raised for the first time on appeal and unsupported by

relevant citation).

Abdallah next argues that she was unable to file suit

against Bain in America before 2011 because, she alleges, she only

discovered then, through Aurel's affidavit, certain additional

facts that were necessary to bring her suit. Specifically,

Abdallah alleges that she learned for the first time in 2011 that

a Bain representative attended all of the important meetings

between Samsonite and Aurel and that "Samsonite's representative

repeatedly sought [Bain's] assent to the main points of the scheme"

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during those meetings. Abdallah also alleges that Aurel's

affidavit "explained why . . . an officer of Bain's group[] had

recruited . . . the owner of PR Consulting . . . in order to find

the purchaser of the Hénin-Beaumont factory."

In fact, however, in her 2007 French pleadings Abdallah

asserted that Bain provided the impetus for the fraudulent scheme,

alleging that a company called PR Consulting was "hir[ed] by

Samsonite on a proposal from one of its main shareholders, Bain

Capital." As to why Bain caused the hiring of PR Consulting,

Abdallah herself observed in 2007 that Bain latched onto the

consultants "following the 'excellent work' carried out by the same

protagonists (PR Consulting[ and] A[urel] . . .) on behalf of the

Delsey Group, in which they performed the same fraudulent

transaction, under the same conditions, each in the same role with

same outcome . . . ."

To the extent there are any new details at all in Aurel's

affidavit, they are not essential in order to plead the claims as

well as she has pled them now. The existential nature of the

corporate transaction, Bain's leadership of the group that acquired

Samsonite, its role in proposing the consultants who put together

the fraudulent sale, its documented direct intervention in the

sale, and the precise details of the actual alleged fraud by

Samsonite, were all known in 2007. Together these facts comprise

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each of the categories of information contained in the present

complaint.

Of course Abdallah learned some new information from

Aurel. But a limitations period does not begin to run only when

plaintiff learns all facts relevant to a claim. That is what

discovery under the Federal Rules of Civil Procedure is for.

Equitable tolling does not apply when a plaintiff has facts

essential for the commencement of a suit (nor does it always apply

when a plaintiff does not have such facts). See, e.g., Protective

Life Ins. Co. v. Sullivan, 425 Mass. 615, 631 (1997) ("[T]he

doctrine of equitable tolling is applicable only where the

prospective plaintiff did not have, and could not have had with due

diligence, the information essential to bringing suit.").

Similarly, fraudulent concealment requires, at least, concealment

of facts necessary to bring a cause of action. See, e.g., Stark 50

Mass. App. Ct. at 234 (holding that the statute of limitations is

"not tolled [due to fraudulent concealment] if the plaintiff has

actual knowledge of the facts giving rise to his cause of action").

Whether Abdallah now actually would have a claim against

Bain but for the expiration of the limitations period we need not

decide. Certainly, allegations that a parent directs or controls

particular actions by a subsidiary are generally not enough to

render the parent liable for all torts related to those actions.

See Esmark, Inc. v. NLRB, 887 F.2d 739, 759 (7th Cir. 1989)

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("Parents and dominant shareholders are almost always 'active

participants' in the affairs of an owned corporation. And, in the

usual case, the exercise of such control . . . does not result in

the owner's personal liability."); Scott v. NG U.S. 1, Inc., 450

Mass. 760, 770 (2008) (when determining whether a parent is liable

for a subsidiary's torts, Massachusetts courts consider whether

"one entity exercised 'pervasive control' over another, and whether

'confused intermingling' exists sufficient to disregard the

corporate formalities"). Perhaps what Abdallah seeks to explore is

a theory of liability for acting in concert. See Restatement

(Second) of Torts § 876 (1979); see also Taylor v. Am. Chemistry

Council, 576 F.3d 16, 35 (1st Cir. 2009) (discussing the

application of section 876 in Massachusetts). Whatever the case

may be, if there is a viable claim for pleading purposes now, then

there was one as well in 2007.2

Abdallah argues finally that, even if she was aware of

Bain's possible involvement in the fraudulent sale at the time she

2
Because we conclude that nothing Abdallah learned in 2011
from Aurel was essential to bringing suit, we also need not
consider whether she could have discovered that information through
an earlier exercise of due diligence. Cf. González v. United
States, 284 F.3d 281, 292 (1st Cir. 2002) (To rely on fraudulent
concealment under Massachusetts law, a "plaintiff must have failed
to discover these facts within the normal limitations period
despite his or her exercise of due diligence."); Protective Life
Ins. Co., 425 Mass. at 631 (1997) ("[T]he doctrine of equitable
tolling is applicable only where the prospective plaintiff . . .
could not have had with due diligence[] the information essential
to bringing suit.").

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began the French litigation, Bain should be estopped from arguing

that she had knowledge of her causes of action before 2011 because

it told a French court that it was "a stranger to the contracts and

to all the acts that pertained to the litigation." Abdallah,

though, clearly did not rely on that general denial, as she pressed

on with her claims in the French civil and labor courts. She

therefore cannot make a viable estoppel argument. See Olsen v.

Bell Tel. Labs., Inc., 388 Mass. 171, 176 (1983) (holding in the

statute of limitations context that "[u]nless the defendants 'made

representations they knew or should have known would induce the

plaintiff to put off bringing suit and . . . the plaintiff did in

fact delay in reliance on the representations,' there is no

estoppel" (quoting White v. Peabody Constr. Co., 386 Mass. 121,

134-135 (1982))).

And, even if Bain had known Abdallah would rely on Bain's

general denial and if Abdallah had in fact done so, she cites no

authority, nor are we aware of any, for the proposition that a lie

told in defense of a suit tolls the running of the limitations

period where the plaintiff suspects the truth and persists with the

suit. The better recourse, upon discovering such a lie, is to

return to the original forum and seek to have the case reopened.

In any event, we need only hold here that Bain's general assertion

that it was a "stranger to" the Samsonite transaction, which

assertion neither contested the specific facts known by Abdallah,

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nor persuaded her to drop her suit against Bain, provides no basis

for tolling the statute of limitations.

IV. Conclusion

For the foregoing reasons the judgment of the district

court is affirmed.

So ordered.

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