Kenda Corp. v. Pot O'Gold Money Leagues, Inc.

United States Court of Appeals
For the First Circuit

No. 01-2493
No. 01-2576
No. 01-2577

KENDA CORPORATION, INC.
d/b/a Pot O'Gold Pool League,

Plaintiff, Appellee/Cross-Appellant,

DAVID RISCHITELLI

Plaintiff, Appellee,

v.

POT O'GOLD MONEY LEAGUES, INC.,
Jeffrey L. Germain, and David R. Kratze,

Defendants, Appellants/Cross-Appellees,

KENNETH J. PERRY and D.F. LETE,

Defendants.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before

Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lipez, Circuit Judge.
 Louis M. Ciavarra, with whom Bowditch & Dewey, LLP was on
brief for appellants Pot O'Gold Money Leagues Inc. and David R.
Kratze.

Jeffrey L. Germain, pro se.

Patricia L. Davidson, with whom Robert L. Hamer and Mirick,
O'Connell, DeMallie & Lougee, LLP were on brief for appellee.

May 19, 2003
 LIPEZ, Circuit Judge. In this complex suit between two

corporations struggling for control over a national billiards

league, Kenda Corporation, Inc., d/b/a Pot O'Gold Pool League

("Kenda"), had much more success before the jury and judge than Pot

O'Gold Money Leagues, Inc., and the individual defendants Jeffrey

L. Germain and David R. Kratze. Indeed, Kenda secured a damage

award of $55,500 against the individual defendants for fraudulent

inducement, and another award against them for $35,000 for tortious

interference with contractual or advantageous business

relationships. Pot O'Gold Money Leagues received nothing from the

jury on its counterclaims. Moreover, Kenda persuaded the judge to

rescind a number of its agreements with the defendants.

Nevertheless, in this appeal and cross-appeal, all parties claim a

variety of errors by the district court. With only one slight

exception, we find no merit in any of these claims. The jury

verdicts will stand. So too will the rulings by the court.

I. BACKGROUND

Kenda Corporation is a Massachusetts corporation that

operates an amateur billiards league under the name Pot O'Gold Pool

League. Kenneth Perry and David Rischitelli formed Kenda in July

1994. By the fall of 1997, the relationship between Perry and

Rischitelli had become tense, but Kenda continued to operate its

pool league. During that time period, Perry became acquainted with

Jeffrey Germain, a businessman from Louisville, Kentucky, and they

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discussed the operation of the Pot O'Gold Pool League and its

potential for expansion. In November 1997, Perry traveled to

Detroit, Michigan, to meet with Germain and his partner David

Kratze to discuss the creation of a national billiards league.

Perry brought with him to this meeting Paul Frankel, who was, at

the time, a regional director with Kenda's league. At the end of

this meeting, the participants resolved to meet again in December.

On or about December 19, 1997, Perry and Frankel, along

with four other individuals who were Kenda employees or league

directors, returned to Detroit to meet with Germain and Kratze. On

that day, the six attendees affiliated with Kenda, along with

Germain, Kratze, and two of their associates, signed a series of

documents which made them shareholders of Pot O'Gold Money Leagues

("Pot O'Gold"), a Kentucky corporation that Germain had established

before the meeting. Each of the ten shareholders paid $200 to

purchase ten shares of stock in the new corporation. Perry

testified at trial that when he went into negotiations with Kratze

and Germain, he thought they intended to invest in the league that

Kenda had been operating since 1994. However, as became clear at

this meeting, Kratze and Germain actually wanted to join with Perry

and his associates to form a new corporation which would be

operating a league competing with Kenda's.

Over the next few months, Perry, with the assistance of

the Kenda employees and directors who had become shareholders in

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Pot O'Gold, transferred Kenda assets and control over regional

leagues and tournaments to Pot O'Gold. These transfers occurred in

a variety of ways. Perry directly transferred $26,000 from the

Kenda corporate account to Pot O'Gold and Germain. He also

directed Kenda employees to change the return addresses on the

envelopes league members used to pay their dues. Instead of dues

being mailed to Kenda's post office box, they now went to one

controlled by Pot O'Gold. Kenda employees also copied and/or

removed Kenda's bookkeeping records and statistics from Kenda's

Massachusetts office to give to Germain and Pot O'Gold. On January

5, 1998, when Rischitelli arrived at the Kenda office, he

discovered that the company's two employees had left, the corporate

records were no longer in the office, and the league dues had not

been sent to Kenda's post office box. He also discovered that

$26,000 was missing from the Kenda bank account.

Later in January, Germain contacted Rischitelli in

Massachusetts and asked him to meet with him and Kratze in Detroit.

Rischitelli agreed, and the meeting occurred on January 23, 1998.

At the start of this meeting, Kratze and Germain presented

Rischitelli with a document entitled "Agreement Not to Compete and

Protection of Confidential Information," which they told him he

would have to sign before any business discussions ensued.

Rischitelli executed the agreement that day in his individual

capacity. Kratze signed as "CEO" of Pot O'Gold. The three parties

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then discussed Pot O'Gold's business plans and Rischitelli's

potential role in the new corporation and league. After this

meeting, Rischitelli agreed that he would become a consultant to

Pot O'Gold. On February 5, 1998, he returned to Detroit and

executed three contracts formalizing his (and Kenda's) relationship

with Pot O'Gold.

The first contract, simply entitled "Agreement," states,

inter alia, that Kenda, through Rischitelli, would provide

consulting services to Pot O'Gold, relinquish all rights and

control over the league, convey office equipment and handbooks to

Pot O'Gold, and provide funds to operate the 1998 national

tournament. In return, Kenda would be paid on a sliding scale tied

to Pot O'Gold's gross revenues. Rischitelli also signed a "General

Release of All Claims and Waiver of Rights" which purported to

release Pot O'Gold and its "officers, directors and shareholders"

from all possible claims Rischitelli or Kenda might bring.

Finally, Rischitelli signed a separate agreement assigning the name

"Pot O'Gold Pool League" to Pot O'Gold.

The new enterprise encountered immediate problems. By

March 1998, Perry had become so frustrated with the manner in which

Germain was operating the pool league that he contacted the

league's regional directors, asking them to stop sending their

weekly dues to Pot O'Gold and instead to send them to Kenda's post

office box in Massachusetts. He told them that Rischitelli would

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take care of all the problems plaguing the league once he was in

charge of operating it again. By the end of March, nearly all the

teams that had formerly been associated with Pot O'Gold had

reaffiliated themselves with Kenda, and Rischitelli started paying

off Pot O'Gold's outstanding liabilities, including awards owed to

teams that had won recent tournaments.

Shortly thereafter, Kenda sued Pot O'Gold, Kratze and

Germain1 ("the defendants") in Worcester Superior Court, alleging,

inter alia, fraud, tortious interference with contractual and/or

advantageous relationships, violations of Mass. Gen. Laws ch. 93A,2

and violations of 18 U.S.C. § 1961 et seq. (civil RICO). Kenda

also asked for a piercing of the corporate veil to allow personal

recovery against Kratze and Germain if the jury found Pot O'Gold

1
Kenda had named two additional defendants, Perry and D.F.
Lete, in its complaint, but voluntarily dismissed those defendants
before trial.
2
Chapter 93A is commonly referred to as the Massachusetts
Consumer Protection Act. Section two declares "Unfair methods of
competition and unfair or deceptive acts and practices in the
conduct of any trade or commerce" to be unlawful. Kenda's claim
arises under § 11, which states, inter alia:
Any person who engages in the conduct of any trade or
commerce and who suffers any loss of money or property,
real or personal, as a result of the use or employment by
another person who engages in any trade or commerce of an
unfair method of competition or an unfair or deceptive
act or practice declared unlawful by section two . . .
may, as hereinafter provided, bring an action . . . for
damages and such equitable relief . . . as the court
deems to be necessary and proper.
Mass. Gen. Laws ch. 93A, § 11 (2002). In its complaint, Kenda
sought Chapter 93A relief only against Pot O'Gold -- not the
individual defendants.

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liable, and sought a declaratory judgment regarding the validity of

the contracts it entered into with Pot O'Gold. In their answer,

the defendants raised a number of counterclaims and third-party

claims, including breach of contract, fraud, trademark (and

servicemark) infringement, and violations of Chapter 93A against

Kenda, and breach of contract, fraud and tortious interference

against Rischitelli individually.

Prior to the commencement of trial, the district court

informed the parties that it would issue a written decision on the

declaratory judgment demands and the opposing Chapter 93A claims

after the jury delivered its verdict. The remainder of the claims

went to trial. The parties filed opposing motions for judgment as

a matter of law at the close of evidence, and the district court

dismissed Kenda's civil RICO claims and Pot O'Gold's claims against

Rischitelli for fraud. After one day of deliberation, the jury

returned the following verdict:

(1) Pot O'Gold was not liable for fraudulent inducement;

(2) Kratze and Germain were liable to Kenda for

fraudulent inducement in the amount of $55,500;

(3) Kratze and Germain were liable to Kenda for $35,000

for tortious interference;

(4) Rischitelli was neither liable for tortious

interference nor breach of contract.

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While Kenda may not have run the table in its claims presented to

the jury, it certainly came close. Shortly thereafter, the court

issued its decision on the opposing Chapter 93A claims and the

declaratory judgment, holding that all of the contracts Rischitelli

signed on behalf of himself and Kenda on January 23 and February 5

were void and that neither party could prevail on its Chapter 93A

claim. All parties now appeal.

II. THE APPEALS OF THE DEFENDANTS

In their brief on appeal, the defendants raise a panoply

of objections to the outcome of this litigation. Arguing that the

court erred in refusing to direct verdicts on certain claims,

admitting certain evidence during the trial, and voiding the

contracts at issue, the defendants ask us to undo the jury's

verdict against them and overturn the court's declaratory judgment

regarding the validity of the contracts. We decline the

invitation.

A. Effects of the Jury's Verdict In Favor of Pot O'Gold

In its most complex argument on appeal, Pot O'Gold claims

that the jury's verdict that it, the corporation, was not liable

for fraudulent inducement "requires judgment in its favor" and a

reversal of the jury's verdicts against the individual defendants,

Kratze and Germain. Before we address this argument on the merits,

we must provide some additional factual background.

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 When Rischitelli met with Kratze and Germain in Detroit

in February, he signed a series of contracts formalizing his

relationship and Kenda's as consultants to Pot O'Gold, and

transferring a number of Kenda assets to the new corporation.

Among those contracts was one entitled "General Release of All

Claims and Waiver of Rights." The third clause in that contract

states:

The undersigned, KENDA CORPORATION, . . . does
hereby remise, release and forever discharge,
POT O' GOLD MONEY LEAGUES, INC. . . . and its
officers, directors and shareholders, . . . of
and from all and all manner of actions, causes
of actions, suits, . . . claims and demands
whatsoever, known or unknown, liquidated or
unliquidated, in law or equity against POT O'
GOLD MONEY LEAGUES, INC., . . . and its
officers, directors and shareholders. . . .

The first clause states that Rischitelli similarly releases all

claims he may have against Pot O'Gold, its officers, directors, and

shareholders. Rischitelli signed this contract both in his own

capacity and as President of Kenda. Rischitelli signed another

contract on behalf of Kenda entitled "Agreement," outlining

Rischitelli's and Kenda's responsibilities as consultants to Pot

O'Gold. This Agreement contains a clause which states, in

pertinent part:

KENDA CORPORATION, now and forever,
relinquishes all of its rights; contractual
relationships and contracts to and with all of
its league members or past league members for
the reason it no longer wishes to
independently create, develop, control, manage
and supervise pool leagues . . . . KENDA

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 CORPORATION waives all rights and claims to
any names, indicia, slogans, copyrights,
including Pot O'Gold Pool Leagues, Inc. and
all similar names.

Kenda also agreed in this contract to transfer its equipment and

records to Pot O'Gold. Finally, Kenda signed a contract assigning

the servicemark "Pot O'Gold" to Pot O'Gold.

Less than three months after signing these contracts,

Kenda filed this lawsuit against Pot O'Gold, Kratze, and Germain,

alleging that Pot O'Gold, Kratze, and Germain had fraudulently

induced Kenda into signing the aforementioned contracts and had

tortiously interfered with Kenda's business relationships. Kenda

also sought a declaratory judgment as to the validity of the

contracts signed on February 5. The fraud and tortious

interference claims went to the jury, which found for Pot O'Gold

but against its officers, Kratze and Germain. The complex jury

verdict form had eight questions, most with subparts, for the jury

to answer. We excerpt the relevant portions:

Question 1(A): Did Kenda Corp. prove that its
agent, David Rischitelli ("Rischitelli")
was fraudulently induced by any of the
defendants listed below to enter into the
agreements dated on or about February 5, 1998?

Pot O' Gold Money Leagues, Inc. Yes/No
David Kratze ("Kratze") Yes/No
Jeffrey Germain ("Germain") Yes/No

....

If you answer Question 1(A) "No" as to Pot
O'Gold Money Leagues, proceed to Question
2(B).

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 ....

Question 2(B): Did Kenda Corp. prove that
either of the individual defendants listed
below tortiously interfered with a contractual
or advantageous business relationship
belonging to Kenda Corp.:

Kratze Yes/No
Germain Yes/No

Beneath both question 1 and 2, the jury was asked to determine the

amount of damages due Kenda if it found that any of the defendants

had committed fraud or tortious interference. The instructions on

the verdict form also told the jury that if they answered "Yes"

with respect to any of the defendants listed in question 1(A), they

were to skip questions 4-6. Questions 4-6 addressed Pot O'Gold's

counterclaims against Kenda (for breach of contract, conversion,

and service mark infringement).3 The jury concluded that Pot

O'Gold did not fraudulently induce the contracts, but that Kratze

and Germain did. It also concluded that Kratze and Germain

committed tortious interference. After the jury delivered its

verdict, the court issued a written opinion declaring that the

Agreement, General Release, and Assignment were void for fraud and

lack of consideration.

3
The remainder of the questions on the verdict form,
questions 7 and 8, addressed Pot O'Gold's counterclaims for
tortious interference and breach of contract against Rischitelli
individually. On both questions, the jury found Rischitelli not
liable.

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 The defendants now argue in their brief on appeal that

"the jury's verdict in favor of Pot O'Gold requires judgment in its

favor." They elaborate as follows:

There can be no doubt that the Feb [sic] 5
Agreements are valid. The Jury determined
that there was no fraud by Pot O'Gold. The
individual defendants, Kratze and Germain,
were not signatories to the Agreements. . . .
[O]ver counsel's objections, the Verdict Form
directed the Jury to consider the claims
against the individuals even if it found the
Feb 5 Agreements valid. But for [plaintiff's
argument that the individual defendants were
acting outside the scope of their authority],
the individuals would have been exonerated[,]
as the Feb 5 Agreements, including the
Release, were determined by the Jury to be
valid, i.e., no fraud by the only party to the
Agreements, Pot O'Gold.

As relief, the defendants ask that "[w]ith respect to all

Agreements, this Court should declare them valid, enforceable and

enter an Order requiring Kenda and Rischitelli to honor their

terms." They also state that the individual verdicts against

Kratze and Germain "must be reversed to avoid a substantial

miscarriage of justice."

As the defendants see it, the jury's verdict in favor of

Pot O'Gold on the fraudulent inducement claim conclusively

establishes the validity of the contracts signed on February 5,

1998, including the General Release, which, by its terms, barred

the kind of claims Kenda brought against Pot O'Gold, Kratze, and

Germain. Consequently, the jury verdict form was flawed in that it

permitted the jury to consider claims of fraudulent inducement and

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tortious interference against Kratze and Germain even after finding

that Pot O'Gold had not committed fraud.4 Moreover, the favorable

finding for Pot O'Gold precluded the court from finding in its

written opinion that the contracts were void.

The defendants contend that if Kenda is able to collect

damages for the tortious conduct of the individual defendants as

well as rescind its contracts with Pot O'Gold, Kenda will "have it

both ways." The jury verdict against the individual defendants

(but not against the corporation) likely was based on the theory

that the individual defendants were acting outside the scope of

their agency as directors of Pot O'Gold when they fraudulently

induced Kenda to sign the February 5, 1998, contracts.5 The

4
At oral argument, counsel claimed he was challenging the
"inconsistent verdict" delivered by the jury, i.e., the finding
that Pot O'Gold had not committed fraud but that its officers had.
If this were the sum and substance of the defendants' objection, we
could dispatch it quickly by finding that the argument was
forfeited. "[O]bjections to the inconsistency of verdicts must be
made after the verdict is read and before the jury is discharged."
Babcock v. General Motors Corp., 299 F.3d 60, 63 (1st Cir. 2002).
Because the defendants did not object at the critical time, this
argument cannot be made on appeal. Nevertheless, after a close
reading of the defendants' brief, we conclude that they are
actually raising an objection to the court's declaratory judgment
rulings, the verdict form, and the jury instructions, a more
complex argument than counsel articulated in his oral presentation.
Therefore, we will give the defendants the benefit of the doubt and
assume, without deciding, that this argument about the individual
liability of the defendants was properly preserved at trial.
5
We say "likely" because of a disconnect between an argument
made by Kenda's counsel to the judge and her subsequent argument to
the jury. Kenda's counsel argued to the court that Kratze and
Germain were exposed to individual liability because they acted
"outside the scope" of reasonable business expectations as officers

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defendants now claim that if the jury concluded that Kratze and

Germain were acting outside the scope of their agency as directors

of Pot O'Gold, then the corporation "cannot be held liable" for

these actions.

This is a strange argument because Pot O'Gold is not

being held "liable" in this case. The jury did not award any tort

damages against the corporation. Pot O'Gold's only "loss" is the

loss of the benefit of its contracts with Kenda -- contracts that

the jury specifically found Kenda was fraudulently induced into

signing. Far from an unfair or inconsistent resolution, the

rescission of the February 5, 1998, contracts is entirely

permissible under basic principles of contract law.

Fraud in the inducement can serve as both a basis for

tort liability, see W. Page Keaton, et al., Prosser and Keaton on

Torts § 105 (5th ed. 1984), and as grounds for rescinding a

contract, see Yorke v. Taylor, 124 N.E.2d 912, 914-15 (Mass. 1955);

Denton v. Utley, 86 N.W.2d 537, 541-42 (Mich. 1957); Restatement

of the corporation. However, she neither presented such a theory
to the jury nor asked the judge for a jury instruction on
individual versus corporate liability on the basis of corporate
agents acting beyond the scope of their authority. While neither
party claims error in the judge's omission from his charge of an
instruction regarding individual liability of the corporate
officers (there was a piercing the corporate veil instruction which
is not at issue here because of the exoneration of Pot O'Gold),
this omission made the jury's task more difficult. Nevertheless,
it was entirely reasonable, based on the evidence submitted, for
the jury to find that the tortious conduct of Kratze and Germain
should not be charged to the corporation.

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(Second) of Contracts § 164 (1981).6 See also Harris v. Delco

Prods., 25 N.E.2d 740, 742 (Mass. 1940) ("The test to be applied in

the case at bar to determine whether the defendant is to be

relieved of its contract by reason of any alleged fraudulent

misrepresentations is the same as that applied in actions of tort

for deceit."). Principles of contract law permit rescission of a

contract even when the misrepresentations at issue were made by a

non-party to the contract. See, e.g., Restatement (Second) of

Contracts § 164(2) ("If a party's manifestation of assent is

induced by either a fraudulent or material misrepresentation by one

who is not a party to the transaction upon which the recipient is

justified in relying, the contract is voidable by the recipient. .

. ."). Rescission is an equitable remedy, and can be imposed on a

contract even in the absence of culpable behavior. See Robert L.

Haig, 3 Business and Commercial Litigation in Federal Courts §41.14

(1998) (recognizing that rescission can be granted in cases of

mistake and innocent representation). Therefore, the mere fact

that Pot O'Gold did not engage in conduct warranting a remedy in

tort does not prevent the court from relieving Kenda of a contract

6
The parties cite Massachusetts case law in support of their
arguments, even though the Agreement and General Release clearly
state that they "shall be construed and interpreted under the laws
of the State of Michigan." Except as it relates to the Chapter 93A
claim, see infra Part III.C., neither party has raised choice of
law as an issue in this case. Since the principles applicable to
rescission are similar under both Massachusetts and Michigan case
law, we need not decide which state's law should apply.

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it was fraudulently induced into signing by directors of Pot

O'Gold.

While Pot O'Gold contends that the rescission of its

contracts with Kenda must be in error because it would permit Kenda

to have it both ways -- by recovering tort damages from the

individual defendants for their "ultra vires" activities and being

able to rescind the contracts with Pot O'Gold -- the defendants are

actually the ones trying to have it both ways. After convincing

the jury that the corporation should not be held liable for the

tortious conduct of its directors (thereby relieving itself of

vicarious tort liability), Pot O'Gold now seeks to retain the

benefits of Kratze and Germain's tortious conduct -- namely, the

signed contracts with Kenda. Such a result does not accord with

the equitable principles of rescission. See, e.g, Boston Five

Cents Sav. Bank v. Brooks, 34 N.E.2d 435, 439 (Mass. 1941)

(discussing fraudulent inducement as a defense to enforcement of a

promissory note; "The [bank] cannot adopt [the acts of an agent

acting beyond his authority] in accepting the note from the [maker]

and at the same time disavow the means by which he secured the

execution and delivery of the note in its behalf."); Bates v.

Southgate, 31 N.E.2d 551, 559 (Mass. 1941) (opining that a

principal should not be able "to enforce for his own benefit a

contract procured through the actual fraudulent misrepresentation

of his agent"); White Tower Mgmt. Corp., v. Taglino, 19 N.E.2d 700,

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701 (Mass. 1939) ("[The seller] ought not to be permitted to take

the benefit of false and fraudulent misrepresentations made by its

agent."). After the rescission of the contracts, Pot O'Gold is now

in the same position it would have been in but for the intentional

misrepresentations of the individual defendants -- there are no

contracts between Pot O'Gold and Kenda. The district court's

ruling on the declaratory judgment permitting the rescission of the

February 5 agreements was correct.

As a necessary corollary, then, since the jury's verdict

in favor of Pot O'Gold did not conclusively establish the validity

of the February 5, 1998, contracts -- including the General Release

-- it was permissible for the jury to consider Kenda's claims

against the individual defendants. Therefore, the district court

did not err in its construction of the jury form.

B. Kratze's Liability for Fraudulent Inducement7

7
We do not consider whether the evidence was sufficient to
support the fraudulent inducement verdict against Germain.
Germain's pro se brief outlines seven issues he is raising on
appeal, but develops a legal argument only on one (validity of the
contracts). The pro se brief states that it "[i]ncorporate[s]
herein by Attachment" the brief filed on behalf of Pot O'Gold and
Kratze. On most of Germain's issues, we have incorporated Kratze's
legal arguments into Germain's brief as well. See, e.g., Instituto
de Educacion Universal Corp. v. U.S. Dep't of Educ., 209 F.3d 18,
23 (1st Cir. 2000) (recognizing that "complaints drafted by non-
lawyers are to be construed with some liberality"). On this
sufficiency of the evidence issue though, Kratze's brief makes an
argument that is specific to Kratze. Because we cannot apply this
argument to Germain, we must conclude his "sufficiency of the
evidence argument" is waived. Ahmed v. Rosenblatt, 118 F.3d 886,
890 (1st Cir. 1997) ("[P]ro se status does not insulate a party
from complying with procedural and substantive law.").

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 The defendants also challenge the jury's verdict against

Kratze on the fraudulent inducement claim on the ground that it was

not supported by the evidence produced at trial. In evaluating

claims that the evidence does not support the jury verdict, our

standard of review is de novo. Walton v. Nalco Chem. Co., 272 F.3d

13, 23 (1st Cir. 2001). We draw "all reasonable inferences in

favor of the prevailing party," and we will affirm "unless the

evidence was 'so strongly and overwhelmingly inconsistent' with the

verdicts that no reasonable jury could have returned them." Id.

(quoting Negron v. Caleb Brett U.S.A. Inc., 212 F.3d 666, 668 (1st

Cir. 2000)). In order to overturn the verdict, we must find that

no reasonable jury could have found "that all five elements of

common law fraud were met with respect to the alleged

misrepresentations. . . . These elements are: (1) that the

statement was knowingly false; (2) that [the defendants] made the

false statement with the intent to deceive; (3) that the statement

was material to the plaintiffs' decision to sign the contract; (4)

that the plaintiffs reasonably relied on the statement; and (5)

that the plaintiffs were injured as a result of their reliance."

Turner v. Johnson & Johnson, 809 F.2d 90, 95 (1st Cir. 1986). The

defendants contend that no reasonable jury could have found that

Rischitelli reasonably relied on the statements Kratze and Germain

made when he signed the contracts.

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 At trial, Rischitelli testified that Kratze and Germain

"brought in a chart that showed projections where they were going

to make $50 million in the next year" running their pool league.

He also testified that Kratze talked to him about the league

affiliating with Oprah's Angels8 -- that he had "300,000 kids

signed, sealed and delivered" as league participants. Finally,

Rischitelli testified that Kratze told him he was going to invest

his own money in the corporation. The defendants argue that these

statements cannot be the basis for fraud liability.

Noting that the statements relied upon by Rischitelli

were not incorporated into the signed contracts, the defendants

point to an integration clause included as Paragraph 10 of the

Agreement, which states: "Each party hereto agrees that this

Agreement is the entire agreement and understanding between the

parties and no verbal statements at any time shall affect in any

way the terms and conditions of this Agreement." But it is well

settled in Massachusetts that "[a]n integration clause in a

contract does not insulate automatically a party from liability

where he induced another person to enter into a contract by

misrepresentation." Starr v. Fordham, 648 N.E.2d 1261, 1268 (Mass.

1995). See Sound Techniques Inc. v. Hoffman, 737 N.E.2d 920, 924

8
Oprah's Angels is a charity affiliated with the talk show
host and actress Oprah Winfrey. Oprah's Angel Network raises money
to provide scholarships and other programs for needy students.
Winfrey also spotlights on her talk show a variety of charities
that cater to underprivileged and abused children and teenagers.

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(Mass. App. Ct. 2000) ("Whether we refer to the clause in question

as a merger clause, an integration clause, or an exculpatory

clause, the settled rule of law is that a contracting party cannot

rely upon such a clause as protection against claims based upon

fraud or deceit."); see also Broomfield v. Kosow, 212 N.E.2d 556,

562 (Mass. 1965) ("Fraud involved in the contract may be proved by

extrinsic evidence. . . .").9

Rischitelli testified that he actually relied on the

statements cited above when deciding to sign the contracts: "I

inquired about whether or not I could become a stockholder with

them. I liked what he had to say about the fact that they were

going to give some money and they had Oprah's Angels already signed

up. . . . [They said t]he only way to bring me on board was for me

to sign a consulting agreement." The jury could have found that

Rischitelli's reliance was reasonable.

"[S]tatements of present intention as to future conduct

may be the basis for a fraud action if . . . the statements

misrepresent the actual intention of the speaker and were relied

upon by the recipient to his damage." McEvoy Travel Bureau Inc. v.

9
The defendants rely on McCartin v. Westlake, 630 N.E.2d 283
(Mass. App. Ct. 1994), which we find to be inapposite. The court
in that case emphasized that the misrepresentations directly
contradicted the contract and attached documents. That is not true
here. Cf. Starr, 648 N.E.2d at 1268 ("Thus, the provisions of the
[] agreement were not 'clearly at variance' with [defendant's]
representation. There was no clear error, therefore, in the
judge's conclusion that the plaintiff was reasonable in his
reliance.") (internal citations omitted).

-21-
Norton Co., 563 N.E.2d 188, 192 (Mass. 1990). Kratze's statement

that he planned to invest his own money into Pot O'Gold is more

than just a vague promise. Rischitelli could have believed that it

accurately expressed his intent at the time he convinced

Rischitelli to sign the contract. Rischitelli had no reason to

believe that Kratze did not intend to carry through with this

investment. The evidence adduced at trial indicated that Kratze

never invested any of his own money into Pot O'Gold.

Similarly, Kratze's statement that he had a "signed,

sealed, and delivered" contract with the Oprah's Angel Network was

a statement of fact, which Rischitelli also had no reason to

suspect was not true. The defendants contend that Rischitelli was

a "sophisticated businessman" who could have detected Kratze's

intentional misrepresentations simply by asking to see the contract

with Oprah. Although Rischitelli might have demanded more of his

future business associates, his failure to confirm that there was

actually a contract with Oprah's Angels does not make his reliance

unreasonable. "Certainly where a defendant has wilfully made false

representations with intent to deceive he ought not to be relieved

of liability because of his victim's lack of diligence." Yorke,

124 N.E.2d at 916. The outer limit of this doctrine requires only

that the relied-upon statement not be "preposterous or palpably

false." Id.; see Kuwaiti Danish Computer Co. v. Digital Equip.

Corp., 781 N.E.2d 787, 795 (Mass. 2003) (finding that plaintiffs

-22-
could not have reasonably relied on an oral statement made during

contract negotiations when the statement's falsity would have been

discovered if plaintiffs had read the entire contract). The mere

fact that Rischitelli could have discovered Kratze's

misrepresentation by pressing Kratze to produce the contract at

issue does not render the statement "palpably false." See Prosser

and Keeton on Torts, supra, § 108 ("It is now held that assertions

of fact as to . . . matters inducing commercial transactions . . .

may justifiably be relied on without investigation . . . where the

falsity of the representation might be discovered with little

effort by means easily at hand."); see also Zimmerman v. Kent, 575

N.E.2d 70, 81 (Mass. App. Ct. 1991) (upholding the determination

that the plaintiff reasonably relied on the false statement, even

though its falsity would have been uncovered merely by obtaining an

independent estimate). Hence, the jury supportably could have

found that Rischitelli's reliance on Kratze's representations

without further investigation was not unreasonable.

Kratze's statement that Pot O'Gold could generate $50

million in revenue in 1998 presents a more difficult question on

the issue of justifiable reliance. Because we find Rischitelli

could have reasonably relied on Kratze's other statements, and

these provide a sufficient basis for the jury's verdict, we need

not determine whether Kratze's projection was mere puffery.

-23-
C. Rischitelli Not Liable for Breaching the January 23 Agreement

The contract Rischitelli signed on January 23 states,

inter alia:

For a period of one (1) year after your
discussion and any resolution [sic]
discussions hereafter, you agree not to
compete with the Company, in any manner, with
respect to the business conducted by the
Company, anywhere in the United States of
America. . . . This Agreement not to compete
pertains to all business conducted by the
Company, including (by way of example only)
the Company's pool and/or dart leagues.

Pot O'Gold claimed that Rischitelli breached this contract in March

1998 when he regained control of the teams that had played in the

league operated by Pot O'Gold since January. The jury disagreed.

After the conclusion of the trial, the court considered the

parties' request for a declaratory judgment on the validity of the

January 23 contract, and declared the contract void.

The validity of this contract must be considered

separately from the validity of the contracts Rischitelli signed on

February 5, 1998. While we have concluded that the individual

defendants' misrepresentations tainted the February 5, 1998,

contracts to the extent that they could be rescinded, the

statements that Pot O'Gold had a signed contract with Oprah's Angel

Network and that Kratze and Germain were going to invest their own

money into the corporation were not made until after Rischitelli

signed the January 23, 1998, contract. These statements, then,

cannot be the basis for finding that Rischitelli was fraudulently

-24-
induced into signing the January 23, 1998, contract. Therefore, we

must carefully review the jury's verdict and the judge's decision

to determine whether the January 23, 1998, contract fails for a

lack of consideration.

The judge had instructed the jury that "[i]f you find by

a preponderance of the evidence that consideration did not exist

with respect to a particular contract, the party accused [of]

breaching that contract is excused from performing under the terms

of that contract and may not be held liable for breach of that

contract."10 There was no objection to this instruction. Question

eight on the jury verdict form asked: "Did Pot O'Gold Money

Leagues, Inc. prove that Rischitelli breached a contract he had

10
The judge also went on to explain that the jury could excuse
a breach of contract if it found by a preponderance of the evidence
that that party was fraudulently induced into signing the contract
in the first place. As discussed above, it is unclear whether
there was sufficient evidence to find for Rischitelli on this
ground with respect to the January 23, 1998 contract. While the
defendants assert that "[t]here was absolutely no fraudulent
inducement" going to the January 23, 1998, contract, they do not
claim error in the verdict form which did not ask the jury to
specify if they excused Rischitelli from a breach of contract
because of fraudulent inducement or failure of consideration. Cf.
Sunkist Growers v. Winckler & Smith Citrus Prods. Co., 370 U.S. 19,
29-30 (1962) (finding reversible error when the jury issued a
general verdict holding party liable, after having been instructed
on multiple theories of liability; since one of the theories
submitted to the jury was tainted by legal error, and the jury's
general verdict made it impossible to determine whether the jury
relied on that ground, reversal was necessary). Therefore, we need
not evaluate the propriety of the verdict form regarding the
January 23, 1998, contract. As we have stated repeatedly: "failure
to brief an argument will result in waiver for purposes of appeal."
Ortiz v. Gaston County Dyeing Mach. Co., 277 F.3d 594, 598 (1st
Cir. 2002), and cases cited therein.

-25-
with it[?]" The jury responded "no." After this verdict, the

district court determined that the Non-Competition Agreement was

"void for lack of consideration in that the defendants provided

nothing of value to Rischitelli in exchange for his promise."

Defendants argue that the "promise to tell Rischitelli

about their plans" was sufficiently valuable consideration to

enforce the contract. That argument ignores Rischitelli's

testimony that Kratze and Germain's business plans consisted only

of their desire to see the Pot O'Gold League expand its player base

and their claims that such growth was imminent given their "signed,

sealed, and delivered" contract with the Oprah's Angels Network.

Noting that this "valuable" information turned out to be no more

than a series of misrepresentations, the trial court explained its

decision to rescind the January 23 contract:

The party seeking rescission must demonstrate
that the alleged misrepresentation and
resulting failure of consideration "amounts to
an abrogation of the contract, or goes to the
essence of it, or takes away its foundation."
NIKE, Inc., 1 F. Supp. 2d at 65, citing Plumer
v. Houghton & Dutton Co., 281 Mass. 173
(1932)(internal quotations and citations
omitted). Although as a general principle of
contract law, courts will not inquire into the
adequacy of consideration in an agreed-upon
exchange, equity will grant relief where the
consideration is "so grossly inadequate as to
shock the conscience of the court". See
Wroblewski v. Wroblewski, 329 Mich. 61, 67
(1950).

We find no fault with this analysis.

-26-
D. Admission of Improper Evidence

The plaintiffs elicited testimony from several witnesses

who were shareholders working as either league directors or

employees of the new corporation, Pot O'Gold. The defendants

object to three types of evidence that they claim were irrelevant:

• oral testimony that "Germain and Kratze lied to [these
shareholders], owed them unpaid wages, stole money and
threatened them";

• a letter Perry wrote to Kratze outlining the problems Pot
O'Gold was having with its finances; and

• a document prepared by Germain and presented to a Pot
O'Gold shareholder/league director showing that Pot
O'Gold could earn $48 million in revenues in 1998.

The defendants argue that this evidence, having nothing to do with

Kenda and Rischitelli, the only plaintiffs in this case, was

irrelevant to Kenda's claims and unfairly prejudicial. They insist

that "the only evidence that the Jury should have heard was that

concerning the alleged fraudulent inducement of the Feb [sic] 5

Agreement." We agree with the trial court that the defendants take

much too narrow a view of the case and the concept of relevance.

Federal Rule of Evidence 401 defines relevant evidence as

"evidence having any tendency to make the existence of any fact

that is of consequence to the determination of the action more

probable or less probable than it would be without the evidence."

The district court enjoys "substantial latitude" in admitting

testimony pursuant to this rule, and "'only in exceptional cases

will reversible error be found in the district court's

-27-
determination of the probative value of testimony in a particular

case.'" Cummings v. Standard Register Co., 265 F.3d 56, 63 (1st

Cir. 2001) (quoting Conway v. Electro Switch Co., 825 F.2d 593, 597

(1st. Cir. 1987)). The evidence in question was relevant to the

issues present in the case at the start of the trial.

In addition to its claim of fraudulent inducement, Kenda

alleged tortious interference with business relations, violations

of civil RICO, and violations of the Massachusetts Consumer

Protection Act (Chapter 93A). The defendants added to the

complexity of the case with their counterclaims. All of the

evidence challenged by the defendants was relevant to at least one

of the claims present in the litigation. For example, Germain's

assertion, accompanied by a chart, that Pot O'Gold could make $48

million in 1998 helped to convince league directors to keep their

teams aligned with Pot O'Gold, and hence bore directly on Kenda's

tortious interference claim. It was also relevant to Kenda's RICO

claim.11 In order to prove the defendants violated RICO, Kenda had

to show the defendants were committing a pattern of racketeering

activity. Therefore, conversations among Pot O'Gold shareholders

(and documents produced during those conversations) regarding

Kratze's and Germain's attempts to expand the company could have

11
Kenda's civil RICO claim is discussed more thoroughly in
Part III.B., infra.

-28-
supported Kenda's claims that Pot O'Gold was engaging in such a

pattern.

Testimony describing the general disarray of Pot O'Gold

between January 1998 and March 1998 was similarly relevant to

Kenda's claims. In support of Kenda's fraudulent inducement claim,

Rischitelli testified that Kratze and Germain told him they were

going to infuse the league with substantial amounts of their own

money. The testimony elicited from Pot O'Gold shareholders -- that

Kratze and Germain had not contributed their own funds to the

league, that the corporation's money was being handled

inappropriately, and that the corporation was therefore unable to

pay its bills -- was relevant to whether Kratze and Germain's

statements to Rischitelli were misrepresentations.

There is no reason to think that the evidence presented

in this case was unfairly prejudicial. The witnesses testified

only to Germain and Kratze's conduct as businessmen. Although that

portrayal was unfavorable, it was offered in support of claims that

they acted improperly in creating Pot O'Gold and in carrying out

its business. Flattering evidence would not have made the case.

See Kelley v. Airborne Freight Corp., 140 F.3d 335, 348 (1st Cir.

1998) ("[A]ll probative evidence is prejudicial."); Onujiogu v.

United States, 817 F.2d 3, 6 (1st Cir. 1987) ("The fact that a

piece of evidence hurts a party's chances does not mean it should

be automatically excluded. If that were true, there would be

-29-
precious little left in the way of probative evidence in any

case.").

E. Damages

After finding Kratze and Germain liable, the jury awarded

Kenda $55,500 on its fraudulent inducement claim and $35,000 on its

tortious interference claim. The defendants now contend that those

damages awards are not supported by the evidence submitted in the

trial, and alternatively, that the awards are redundant. We

disagree.

1. Fraudulent Inducement

Rischitelli testified that he wrote Germain a $25,000

check for the purpose of fulfilling his responsibilities under the

February 5, 1998, Agreement. That agreement states that Kenda

would be responsible for the tournament fees for the upcoming

national tournament. Rischitelli gave the $25,000 check to Germain

shortly after the February 5 meeting.12 As the jury found that

Rischitelli was fraudulently induced into signing the February 5,

1998, contract on behalf of Kenda, the transfer of this $25,000 can

be directly traced to this contract.

Additionally, Rischitelli testified that he estimated

Kenda would have received approximately $80,000 in revenue if it

12
Rischitelli initially wrote this check to Pot O'Gold. After
Germain received it, he drove to Massachusetts, personally returned
the check to Rischitelli, and demanded he write out another check
in Germain's name only.

-30-
had operated the league between January 5, 1998, and March 23,

1998. Certainly, as Kenda did not operate the league during this

period, Rischitelli could not know for sure how much money players

actually paid in dues to Pot O'Gold. Nevertheless, his estimate

was reconstructed from records indicating the number of teams

registered and the number of games played during the three-month

period that the teams were sending their dues to Pot O'Gold and

Germain. The remainder of the jury's award for fraudulent

inducement ($30,500) could have been to compensate Kenda for this

lost income. It is reasonable to assume, as the jury must have,

that at least $30,500 of the estimated $80,000 in revenues Kenda

lost would have been earned after February 5, 1998, the date of the

contract signing.

2. Tortious Interference

Kenda also adduced sufficient evidence to justify a

discrete award of $35,000 on the tortious interference claim.

Rischitelli and Perry both testified that Perry transferred $26,000

from the Kenda account to Germain before Rischitelli even knew

Perry was abandoning their business. Perry took two blank checks

that Rischitelli had signed before leaving for vacation in December

1997, wrote out one for $10,000 and the other for $16,000, and gave

them to Germain. The remaining $9,000 of the award could have come

from revenues Kenda lost before February 5, 1998. Teams affiliated

with Kenda had been paying dues through the mail. Kenda employees

-31-
would send blank score sheets to the teams together with an

envelope addressed to Kenda's post office box. After playing each

week, the teams would fill out their score sheets, place them in

these envelopes along with their weekly fees, and mail them. After

the meeting on December 19, 1997 (when Perry and the other former

Kenda employees and league directors became shareholders of Pot

O'Gold), Germain directed Pot O'Gold employees to change the

addresses on these envelopes. The new address was a post office

box controlled by Pot O'Gold. Rischitelli testified that when he

returned from vacation in early January, the Kenda post office box

had very few envelopes in it. Therefore, it is reasonable to

assume, as the jury probably did, that Kenda lost at least $9,000

in revenues before February 5, 1998. Consequently, we find that

the jury verdict was both supportable and non-redundant.

F. April 1, 2002, Amended Judgment

Finally, the defendants cite what appears to be a

clerical error in the amended judgment. The district court entered

judgment on September 5, 2001. Shortly thereafter, the plaintiff

moved to amend the judgment under Rule 59(e) for the purpose of

adding prejudgment interest. The defendants did not oppose the

motion, and the court issued an amended judgment on April 1, 2002.

In the amended judgment, the district court omitted the following

sentence that had been present in the initial judgment: "[A]nd it

is FURTHER ORDERED that judgment be entered in favor of the

-32-
defendant Pot O'Gold Money Leagues, Inc. on the plaintiff's claims

against it that were tried before the jury." Although the

plaintiffs prevailed in their claims against Kratze and Germain,

the jury concluded that Pot O'Gold was not liable for fraudulent

inducement. Therefore, on that claim, Pot O'Gold was the

prevailing party. This sentence should have been retained in the

amended judgment. Therefore, we will direct the district court to

restore the deleted language to its amended judgment.

III. THE CROSS-APPEAL

In its cross-appeal, Kenda argues that the district court

erred in three ways: (1) in denying Kenda's motion for leave to

amend its complaint; (2) in directing a verdict in the defendants'

favor on the civil RICO claim; and (3) in finding that Pot O'Gold

did not violate Mass. Gen. Laws ch. 93A. We will address these

arguments in turn.

A. Motion for Leave to Amend

On May 22, 2001 (one week after the jury had delivered

its verdict), Kenda moved to amend its complaint to add claims

against Kratze and Germain for violations of Mass. Gen. Laws ch.

93A. Under its original complaint, already twice amended, Kenda

only named the corporation Pot O'Gold as a Chapter 93A defendant.

Kratze and Germain opposed the amendment and the district court

denied the motion.

-33-
 Rule 15(b) permits post-trial amendments to conform the

pleadings to the evidence "[w]hen issues not raised by the

pleadings are tried by express or implied consent of the parties."13

Fed. R. Civ. P. 15(b). The district court denied Kenda's motion on

the grounds that Kratze and Germain did not consent to their

inclusion in the Chapter 93A count, and that the addition of such

a count would unduly prejudice the individual defendants. "We

review denials of leave to amend under Rule 15 for abuse of

discretion, deferring to the district court for any adequate reason

apparent from the record." Resolution Trust Corp. v. Gold, 30 F.3d

251, 253 (1st Cir. 1994).

Consent to trial on a particular claim can be either

express or implied. As there is no indication that Kratze and

Germain expressly consented to trying a Chapter 93A claim, we must

determine whether they impliedly consented to such a claim.

"Consent to the trial of an issue may be implied if, during the

trial, a party acquiesces in the introduction of evidence which is

relevant only to that issue." DCPB, Inc. v. City of Lebanon, 957

13
On appeal, Kenda frames its motion to amend as one under
Rule 15(b), even though it is not clear that it relied on Rule
15(b) in its initial motion to the trial court. In that motion,
Kenda invoked the standard for decision under Rule 15(a) when it
stated that "[Rule] 15 mandates that leave to amend the complaint
be granted where justice so requires." Nevertheless, the trial
court read Kenda's motion broadly, citing as grounds for its denial
factors relevant to analysis under both 15(a) and 15(b).
Therefore, we will read Kenda's motion to the trial court in a
similar manner and reach the merits of its 15(b) argument.

-34-
F.2d 913, 917 (1st Cir. 1992). But "[t]he introduction of evidence

directly relevant to a pleaded issue cannot be the basis for a

founded claim that the opposing party should have realized that a

new issue was infiltrating the case." Id.; see Galindo v. Stoody

Co., 793 F.2d 1502, 1513 (9th Cir. 1986) ("It is not enough that an

issue may be 'inferentially suggested by incidental evidence in the

record;' the record must indicate that the parties understood that

the evidence was aimed at an unpleaded issue."). As Kenda points

to no evidence introduced against Kratze and Germain that goes

solely to their individual liability under Chapter 93A, we agree

with the district court that the individual defendants did not

consent to the inclusion of the individual Chapter 93A claims.

Even in the absence of consent, explicit or implicit,

Kenda argues that the district court erred in denying the amendment

in the absence of a finding that the late amendment would prejudice

the defendants. Kenda fails to recognize that prejudice, or lack

thereof, is only one issue to be weighed in considering whether an

amendment is appropriate. "[A] finding that the nonmoving party

would not be prejudiced by an untimely amendment does not compel a

determination that the amendment is appropriate." United States v.

Davis, 261 F.3d 1, 59 (1st Cir. 2001). Finally, Kenda offered no

explanation for its lengthy delay in raising its motion to amend.

The district court did not abuse its discretion when it denied

Kenda's motion to amend.

-35-
B. Civil RICO

After the close of the evidence, the court granted the

defendants' motions for judgment as a matter of law on Kenda's

civil RICO claim, 18 U.S.C. §§ 1961-1968 (2000). Kenda alleged

that Pot O'Gold, Kratze, and Germain participated in racketeering

activity by committing acts of mail fraud, wire fraud, and

transporting money procured by fraud from Kenda over state lines,

all for the purpose of establishing Pot O'Gold. We agree with the

district court that Kenda did not produce sufficient evidence to

permit a reasonable jury to find that the defendants violated RICO.

In order to succeed in its RICO claim, Kenda had to prove

four elements required by the statute: "(1) conduct, (2) of an

enterprise, (3) through a pattern, (4) of racketeering activity."

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985), quoted in

Feinstein v. Resolution Trust Corp., 942 F.2d 34, 41 (1st Cir.

1991). We focus on the pattern of racketeering activity.

"By statute, the 'pattern' element requires a plaintiff

to show at least two predicate acts of 'racketeering activity,'

which is defined to include violations of specified federal laws,

such as the mail and wire fraud statutes." Efron v. Embassy Suites

(P.R.) Inc., 223 F.3d 12, 15 (1st Cir. 2000). Kenda alleges that

the defendants' redirection of the players' payment envelopes and

the numerous false promises Germain and Kratze made over the phone

to Kenda agents were "fraudulent use[s] of the mail or telephone

-36-
constitut[ing] . . . separate predicate act[s]" under the statute.

Case law has made clear, though, that the mere showing of multiple

predicate acts is insufficient to prove a pattern: "the plaintiff

also must demonstrate that the 'predicates are related, and that

they amount to or pose a threat of continued criminal activity.'"

Id. (quoting H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229,

239 (1989)). While there is no precise formula to help us

determine whether an organization poses a continuing threat of

criminal behavior, our recent decision in Systems Management, Inc.

v. Loiselle, 303 F.3d 100 (1st Cir. 2002), forecloses Kenda's

argument that the defendants' conduct posed such a threat. In

Systems Management, we stated:

RICO is not aimed at a single narrow criminal
episode, even if that single episode involves
behavior that amounts to several crimes (for
example, several unlawful mailings). A
single "scheme" may be reached by RICO, but
only if it is reasonably broad and far
reaching.

Id. at 105 (internal citations omitted).

Kenda adduced evidence of only a single scheme by the

defendants -- their plan to induce Rischitelli into signing away

control of Kenda's assets and its pool league. Although Kratze and

Germain committed multiple acts justifying civil verdicts against

them, all of these efforts were directed toward one transaction,

and therefore, "did not comprise or threaten 'the kind of continued

criminal activity at which the RICO statute was aimed.'" Id. at

-37-
106 (quoting Apparel Art Int'l, Inc. v. Jacobson, 967 F.2d 720, 724

(1st Cir. 1992) (holding that a contractor's fraudulent activities,

all aimed at obtaining and keeping a single government contract, do

not amount to a pattern under RICO)); see Efron, 223 F.3d at 18

(concluding that defendant's "multiple related acts of deception"

could not be basis for RICO liability as they were all aimed at the

narrow goal of "transforming the ownership of the Partnership

during its early stages"). If Kenda had produced evidence that the

defendants had plans to take over another company or pool league in

the same fraudulent manner, they might have had a stronger argument

opposing the motion for a directed verdict. Based on the evidence

presented at trial, though, there was insufficient evidence for a

jury to find that the defendants posed a continuing threat of

criminal activity. See Efron, 223 F.3d at 19 ("There is nothing to

suggest that the defendants would seek to repeat their fraud in

other partnerships or similar business settings, or to employ mail

and wire fraud indefinitely in the . . . partnership.").

C. Chapter 93A

Kenda also argues that the district court erred in

finding that Pot O'Gold did not violate Mass. Gen. Laws ch. 93A.

Chapter 93A states that "[u]nfair methods of competition and unfair

or deceptive acts or practices in the conduct of any trade or

commerce are hereby declared unlawful." Mass. Gen. Laws ch. 93A,

§ 2(a) (2002); see Arthur D. Little, Inc. v. Dooyang Corp., 147

-38-
F.3d 47, 55 (1st Cir. 1998). "The statute does not specifically

define 'unfair' or 'deceptive,'" Id. at 55, but Massachusetts

courts have recognized that "[a] practice is unfair if it is within

the penumbra of some common-law, statutory, or other established

concept of unfairness; is immoral, unethical, oppressive, or

unscrupulous; and causes substantial injury to other businessmen."

Linkage Corp. v. Trustees of Boston Univ., 679 N.E.2d 191, 209

(Mass. 1997) (modifications and internal quotations omitted).

The district court based its ruling for Pot O'Gold on a

number of grounds. First, it concluded that Kenda's Chapter 93A

claim against Pot O'Gold was "without support because the jury

found that [Pot O'Gold] was not liable for fraud and there is no

other actionable misconduct on which to base such a claim."

Additionally, it determined that even if the jury's finding that

Kratze and Germain were liable for fraud could be imputed to Pot

O'Gold, "the court [was] not persuaded that the defendants' actions

were sufficiently unfair or deceptive" to justify Chapter 93A

relief. Finally, the court concluded that the actions of the

several defendants "did not occur 'primarily and substantially'

within the Commonwealth of Massachusetts," but instead occurred in

Michigan. For our purposes, we need only conclude that the

district court was correct on one of the grounds cited. We focus

on the "primarily and substantially" determination.

-39-
 Kenda points to the same evidence in support of its

Chapter 93A claim that it relied upon for its tort claims -- the

transfer of funds and teams from Kenda to Pot O'Gold and the

fraudulent misrepresentations made to Rischitelli. Assuming

arguendo that this conduct by Pot O'Gold rises to the level of

"unfair or deceptive" as defined by the statute, Kenda's claim

still must fail. Chapter 93A permits relief only for unfair or

deceptive actions that primarily and substantially occur within the

Commonwealth of Massachusetts. Mass. Gen. Laws ch. 93A, § 11

(2002). The Massachusetts Supreme Judicial Court recently issued

an opinion discussing the test for evaluating the locus of

allegedly unfair or deceptive conduct in the context of a Chapter

93A claim. See Kuwaiti Danish Computer Co., 781 N.E.2d at 799.

Specifically citing to a three-part test we had suggested in our

decisions in Roche v. Royal Bank of Canada, 109 F.3d 820, 829 (1st

Cir. 1997), and Clinton Hospital Association v. Corson Group, Inc.,

907 F.2d 1260 (1st Cir. 1990),14 the SJC concluded that "[w]hether

the 'actions and transactions [constituting the § 11 claim]

14
In Roche, we outlined three factors culled from
Massachusetts case law that are relevant in determining whether the
alleged misconduct occurred primarily and substantially within the
Commonwealth: "(1) where defendant committed the deception; (2)
where plaintiff was deceived and acted upon the deception; and (3)
the situs of plaintiff's losses due to the deception." 109 F.3d at
829 (citing Clinton Hosp. Ass'n, 907 F.2d at 1265-66); see also KPS
& Assoc. v. Designs by FMC, Inc., 318 F.3d 1, 24 (1st Cir. 2003)
(restating three-factor test); Yankee Candle Co. v. Bridgewater
Candle Co., 259 F.3d 25, 47 (1st Cir. 2001) (same).

-40-
occurred primarily and substantially within the Commonwealth' is

not a determination that can be reduced to any precise formula."

Kuwaiti Danish Computer Co., 781 N.E.2d at 799 (quoting Mass. Gen.

Laws ch. 93A, § 11). Instead, the SJC outlined a fact-intensive

approach to the question:

[T]he analysis required under § 11 should not
be based on a test identified by any
particular factor or factors because of a
tendency to shift the focus of inquiry away
from the purpose and scope of [Chapter] 93A.
Section 11 suggests an approach in which a
judge should, after making findings of fact,
and after considering those findings in the
context of the entire § 11 claim, determine
whether the center of gravity of the
circumstances that give rise to the claim is
primarily and substantially within the
Commonwealth.

Id. Although both the parties and the district court constructed

their analyses within the framework of the three-part test we had

discussed in earlier cases, we must follow the SJC's pronouncements

on interpretations of Massachusetts statutes. Therefore, we

evaluate whether the conduct occurred "primarily and substantially

within the Commonwealth" under the "center of gravity" test

announced in Kuwaiti Danish Computer Co.

We are aided in this endeavor by the district court's

factual findings, which, although later subjected to an incorrect

legal standard, are nonetheless reusable. See Societe des Produits

Nestle v. Casa Helvetia, Inc., 982 F.2d 633, 642 (1st Cir. 1992)

(explaining that trial court's subsidiary findings of fact may be

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subject to reuse on appeal, despite trial court's legal error);

United States v. Mora, 821 F.2d 860, 869 (1st Cir. 1987)

(explaining that the court of appeals can arrange untainted factual

findings along the proper legal matrix). Giving due weight to

these findings, the "center of gravity" of the transactions that

gave rise to the claims in this case was Michigan. Although

Germain contacted Perry at the Kenda office in Massachusetts, it

was not until Perry traveled to Michigan that he was convinced by

the defendants' misrepresentations to transfer money out of the

Kenda account and abandon his position as owner of Kenda. Soon

thereafter, Perry traveled to Michigan again to meet with Kratze

and Germain, bringing with him five Kenda employees or league

directors. At that meeting, the Kenda agents in attendance became

shareholders of Pot O'Gold, and the league directors agreed to re-

affiliate the regional leagues under their control from Kenda to

Pot O'Gold. Those two meetings, inspired by Kratze and Germain's

misrepresentations, are the pivotal events underlying Kenda's

Chapter 93A claim.

It was also in Michigan that Rischitelli was convinced to

sign away the remainder of his company to Pot O'Gold. Certainly,

Germain and Kratze made vague and somewhat enticing statements to

Rischitelli over the phone while he was in Massachusetts.

Nevertheless, the actual misrepresentations upon which Kenda relies

in this case were not expressed until Rischitelli traveled to

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Michigan on January 23, 1998. Rischitelli held meetings with

Germain and Kratze twice, both times in Michigan, and at both of

those meetings he signed the contracts at the heart of this case.

Since the misrepresentations and the signing of contracts are some

of the primary events Kenda points to in support of its Chapter 93A

claim, we must conclude that the "center of gravity" of the

challenged conduct occurred in Michigan.

The plaintiffs correctly cite a number of activities that

occurred in Massachusetts as a result of deceptive statements made

and received in Michigan:

• Perry directed Kenda employees to copy and remove records
from one Massachusetts office to another;

• Kenda employees called non-shareholder league directors
from Massachusetts to convince them to reaffiliate their
regional leagues with Pot O'Gold;

• Perry and Rischitelli withdrew funds from Kenda's bank
account in Massachusetts to give to Germain and Pot
O'Gold.

Nevertheless, these actions were ancillary to, and a direct result

of, misrepresentations made and contracts signed in Michigan. As

the SJC recognized in Kuwaiti Danish Computer Co., when "virtually

all the conduct that can be said to be unfair or deceptive" occurs

outside the Commonwealth, there can be no Chapter 93A liability.

Kuwaiti Danish Computer Co., 781 N.E.2d at 800. In this case, the

defendants' actionable conduct occurred primarily in Michigan. The

subsequent Massachusetts activities were carried out mostly by

Perry or other former Kenda employees -- none of whom were

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defendants in the case. Therefore, we find that the "center of

gravity" of the defendants' allegedly unfair or deceptive conduct

occurred primarily outside the Commonwealth. Kenda's Chapter 93A

claim must fail.

IV. CONCLUSION

We direct the district court to amend its judgment of

April 1, 2002, to add: "and it is FURTHER ORDERED that judgment be

entered in favor of the defendant Pot O'Gold Money Leagues, Inc. on

the plaintiff's claims against it that were tried to the jury." In

all other respects, the judgment of the district court is AFFIRMED.

Kenda is awarded one-half costs.

So ordered.

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