The Boston Consulting Group, Inc. v. NCR Corporation

Background

NCR asserted four counterclaims against BCG: breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, breach of contract, and breach of the implied covenant of good faith and fair dealing. BCG moved to dismiss all four counterclaims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a pleading does not state a legally sufficient claim.

The dispute arose from a Statement of Work under which BCG provided consulting services to NCR. NCR alleged that BCG and NCR’s then-president and chief operating officer, Mark Benjamin, entered into a secret arrangement. According to NCR’s counterclaims, BCG helped promote Mr. Benjamin’s candidacy for NCR’s chief executive officer position in exchange for a discretionary bonus. NCR also alleged that BCG helped Mr. Benjamin leave NCR, helped him obtain employment with Nuance Communications, and improperly used NCR’s confidential information.

Legal Standard and Governing Law

On a motion to dismiss, the court accepts well-pleaded factual allegations as true and draws reasonable inferences for the nonmoving party, but it does not accept legal conclusions stated as facts. The allegations must make the claim plausible, rather than merely possible. The court applied New York law because the Statement of Work selected New York law, and it evaluated the counterclaims under the same standard used for claims in a complaint.

Breach of Fiduciary Duty

The court held that NCR alleged enough facts for the claim to proceed. A fiduciary relationship exists when one party is trusted to act or provide advice for another on matters within the relationship, particularly where the trusted party has superior expertise or influence. The court found plausible NCR’s allegations that BCG’s expertise, access to NCR’s information and systems, participation in senior leadership discussions, and influence over business decisions created such a relationship.

The court also found plausible NCR’s allegation that BCG breached its duty by failing to disclose its secret arrangement with Mr. Benjamin. The court rejected BCG’s argument that the fiduciary-duty claim was merely duplicative of the contract claim, reasoning that the alleged duty to disclose a relationship that could conflict with NCR’s interests was separate from BCG’s contractual obligations. The court denied BCG’s motion to dismiss Count I.

Aiding and Abetting a Breach of Fiduciary Duty

The court held that NCR sufficiently alleged that Mr. Benjamin breached his duty of loyalty to NCR and that BCG knowingly participated in that breach. The counterclaims alleged that Mr. Benjamin secretly worked with BCG to advance his candidacy for chief executive officer, and that BCG helped negotiate a one-sided contract, remove or replace employees who opposed it, and support Mr. Benjamin’s promotion in hopes of receiving a discretionary bonus.

The court rejected BCG’s arguments that NCR had not adequately pleaded BCG’s knowledge and that the claim duplicated the direct fiduciary-duty claim. The court explained that the alleged underlying breach—Mr. Benjamin’s collusion with BCG to accelerate his promotion—was distinct from his later effort to obtain employment at Nuance and from BCG’s alleged failure to disclose its arrangement with him. The court denied BCG’s motion to dismiss Count II.

Breach of Contract

The court held that NCR plausibly alleged that BCG breached the Statement of Work. NCR alleged that BCG had promised to help NCR “win in the market,” which the court found could reasonably mean improving NCR’s business initiatives and retaining talented employees. NCR also alleged that BCG breached this obligation by helping Mr. Benjamin leave NCR.

NCR separately alleged that BCG used confidential information to help Mr. Benjamin obtain employment with Nuance, even though the Statement of Work limited BCG’s use of NCR’s confidential information to the consulting engagement. The court found these allegations sufficient at the pleading stage. It rejected BCG’s argument that NCR had not shown a decline in gross margin or net present value, explaining that NCR did not need to specify the precise measure of damages or prove causation at this stage. The court denied BCG’s motion to dismiss Count III.

Implied Covenant of Good Faith and Fair Dealing

The court granted BCG’s motion to dismiss Count IV. New York law implies a duty of good faith and fair dealing in contracts, but a separate claim generally cannot proceed when it relies on the same allegations and seeks the same damages as a breach-of-contract claim.

The court found that NCR’s implied-covenant claim repeated the allegations that BCG failed to help NCR “win in the market” and improperly used confidential information to help Mr. Benjamin obtain other employment. NCR’s argument that it pleaded the claim as an alternative theory did not change the result. The court therefore granted BCG’s motion to dismiss Count IV.

Disposition

Judge Lorna G. Schofield granted in part and denied in part BCG’s motion to dismiss NCR’s counterclaims. The claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, and breach of contract remained. The claim for breach of the implied covenant of good faith and fair dealing was dismissed. The court also denied as moot BCG’s application for oral argument and directed the Clerk of Court to close the motions at Docket Nos. 34 and 45.