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Krepps v. Niit (Usa), Inc.

United States District Court, Seventh Circuit

June 12, 2013

NIIT (USA), INC., Defendant.


JEFFREY COLE, District Judge.

The plaintiff is an economist who, during the pertinent period, was a faculty member with Insead, a French business school with multiple campuses in Europe, Asia and the Middle East. His company, Economist's Advocate, entered into a Joint Venture Agreement with a company called Cognitive Arts, the purpose of which was the development and marketing of business course materials.[1] The result was litigation in the Southern District of New York and now in this District. Here, the plaintiff is suing Cognitive Arts' successor, NIIT (USA), Inc., to enforce a stock option he had under the Joint Venture Agreement, whose labyrinthine provisions seem designed to conceal rather than to elucidate the parties' true purpose.

Upon the termination of the joint venture, Mr. Krepps claims that the Joint Venture Agreement entitles him to convert his shares in the joint venture to Cognitive Arts common stock. NIIT acquired Cognitive Arts in February 2003 and is involved here because the Joint Venture Agreement stated that its provisions would:

be binding upon [Economist's Advantage] and [Cognitive Arts] and their respective successors and assigns. Without limitation of the foregoing, the provisions of the [shares conversion option] shall be interpreted, mutatis mutandis, to give effect to the parties' intention that [Economist's Advocate] shall have the option to convert its interests in the [joint venture] into either equity of [Cognitive Arts] or any successor entity to [Cognitive Arts] if [Cognitive Arts] is acquired by a third person.

( Amended Complaint, Ex. 1). NIIT is moving for summary judgment, arguing that because of what happened in the New York litigation, plaintiff is judicially estopped from maintaining the current claim.




Summary Judgment Under Local Rule 56.1

As always, the facts underlying this summary judgment proceeding are drawn from the parties' Local Rule 56.1 submissions. "For litigants appearing in the Northern District of Illinois, the Rule 56.1 statement is a critical, and required, component of a litigant's response to a motion for summary judgment." Sojka v. Bovis Lend Lease, Inc., 686 F.3d 394, ___, (7th Cir. 2012). Local Rule 56.1 requires a party seeking summary judgment to include with its motion "a statement of material facts as to which the... party contends there is no genuine issue and that entitle the... party to a judgment as a matter of law." Local Rule 56.1(a)(3); Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643 (7th Cir. 2008). Each paragraph must refer to the "affidavits, parts of the record, and other supporting materials" that substantiate the asserted facts. Local Rule 56.1(a)(3); F.T.C. v. Bay Area Business Council, Inc., 423 F.3d 627, 633 (7th Cir. 2005).

The party opposing summary judgment must then respond to the movant's statement of proposed material facts; that response must contain both "a response to each numbered paragraph in the moving party's statement, " Local Rule 56.1(b)(3)(B), and a separate statement "consisting of short numbered paragraphs, of any additional facts that require the denial of summary judgment, " Local Rule 56.1(b)(3)(C); Ciomber, 527 F.3d at 643. Again, each response, and each asserted fact, must be supported with a reference to the record. Local Rule 56.1(b)(3)(B); Cracco v. Vitran Exp., Inc., 559 F.3d 625, 632 (7th Cir. 2009); Bay Area Business Council, Inc., 423 F.3d at 633.

The district court is entitled to enforce strict compliance with its local rules regarding summary judgment motions. Yancick v. Hanna Steel Corp., 653 F.3d 532, 537 (7th Cir. 2011); Schmidt v. Eagle Waste & Recycling, Inc., 599 F.3d 626, 630 (7th Cir.2010). Responses and facts that are not set out and appropriately supported in an opponent's Rule 56.1 response will not be considered, see Shaffer, 662 F.3d at 442 (court need not consider any fact not contained in the parties' Rule 56.1 statements); Bay Area Business Council, 423 F.3d at 633 (court properly disregarded affidavits not referenced in 56.1 submission). And of course, the evidence must be admissible at trial. See Lopez v. Ford Motor Co., 2012 WL 1021796, 3 (N.D.Ill. 2012)(collecting cases); Gbur v. City of Harvey, Ill., 835 F.Supp.2d 600, 607 (N.D.Ill. 2011)(collecting cases); Andrew Polovin and Andrew MacNally, Practical and Strategic Considerations for Addressing Evidentiary Issues at Summary Judgment, The Circuit Rider 21 (May 2013).



The previous litigation was in the Southern District of New York in 2001. Economist's Advocate, LLC v. Cognitive Arts Corp ., No. 01 Civ. 9468 (RWS). ( Def.St., ¶ 7; Pl.Rsp., ¶ 7). Economist's Advantage, the plaintiff's firm, sued Cognitive Arts and Insead in the aftermath of the joint venture. The plaintiff alleged that he had entered into an agreement to terminate the joint venture with the two under which he released his stock option rights and intellectual property rights in exchange for a promised payment of $500, 000. ( Def.St., ¶ 8; Pl.Rsp., ¶ 8; Dkt. 43-3, ¶¶ 11-12). Cognitive Arts and Insead apparently didn't come through with the money, and this led to plaintiff's breach of contract and quantum meruit claims, among others.

In his quantum meruit claim, plaintiff alleged that:

[a]t the specific request of [Cognitive Arts], [Economist's Advantage] agreed to release its rights under the Letter Agreement and the Development Agreement, and assigned its intellectual property rights in the Course Materials to INSEAD and INSEAD OnLine.

It is further claimed that Economist's Advantage is "entitled to the fair value of the release of its rights under the [Joint Venture] Agreement and the Development Agreement, and the fair value of the intellectual property rights in the Course Materials that it assigned to INSEAD and INSEAD OnLine, which together exceed $8, 000, 000." ( Def.St., ¶ 9, Pl.Rsp., ¶ 9; Dkt. 43-3, ¶¶ 33-34).[2]

In February 2003, while the litigation was pending in New York, the defendant here, NIIT, acquired Cognitive Arts. ( Amended Complaint, ¶ 24). Also while the litigation was pending, on May 2, 2003, Economist's Advantage, acting through plaintiff, informed Cognitive Arts that it was exercising the Joint Venture Agreement's conversion option. ( Def.St., ¶ 10; Pl.Rsp., ¶ 10; Amended Complaint, ¶ 45). It also informed Cognitive Arts that "[t]his exercise of [Economist's Advantage's] conversion rights is without prejudice to any position that [Economist's Advantage] has taken or may take in the [SDNY litigation]." ( Def.St., ¶ 11; Pl.Rsp., ¶ 11). Of course, the position ...

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