Bessemer Trust Company, N.A. v. Branin, No. 08-2462 (2d Cir. 2010)

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The court issued a subsequent related opinion or order on April 5, 2012.

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08-2462-cv(L), 08-2677(XAP) Bessemer Trust Company, N.A. v. Branin 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: June 3, 2009 Question Certified: August 24, 2010) 5 Docket Nos. 08-2462-cv(L), 08-2677-cv(XAP) 6 ------------------------------------- 7 BESSEMER TRUST COMPANY, N.A., 8 Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, 9 - v - 10 FRANCIS S. BRANIN, JR., 11 Defendant-Counterclaimant-Appellant-Cross-Appellee. 12 ------------------------------------- 13 14 Before: McLAUGHLIN, CALABRESI, and SACK, Circuit Judges. Appeal by the defendant and cross-appeal by the 15 plaintiff from a judgment of the United States District Court for 16 the Southern District of New York. 17 Sprizzo, Judge) made three rulings relevant to this appeal. 18 First, it found the defendant liable to the plaintiff for 19 improper solicitation of a client's account where that account 20 had earlier been transferred to the plaintiff by, inter alios, 21 the defendant, in violation of the so-called "Mohawk doctrine." 22 Second, the court granted summary judgment dismissing the 23 defendant's counterclaims against the plaintiff for breach of 24 contract, for promissory estoppel, and in quantum meruit. 25 it awarded damages to the plaintiff based on a "return of The district court (John E. Third, 1 capital" rather than a "lost profits" theory. 2 New York Court of Appeals a question of New York law relevant to 3 the determination of the defendant's liability under the Mohawk 4 doctrine, affirm the dismissal of the counterclaims, and reserve 5 decision on the question of damages pending a response from the 6 Court of Appeals. 7 8 We certify to the Affirmed in part, question certified in part, decision reserved in part. 9 10 11 12 13 14 DONALD I. STRAUBER, Chadbourne & Parke LLP (Gretchen N. Werwaiss, Marjory T. Herold, and Bernadette K. Galiano, of counsel), New York, N.Y., for PlaintiffCounter-Defendant-Appellee-CrossAppellant. 15 16 17 18 19 20 LOUIS P. DiLORENZO, Bond, Schoeneck & King PLLC (Michael I. Bernstein and Michael P. Collins, of counsel), New York, N.Y., for DefendantCounterclaimant-Appellant-CrossAppellee. 21 SACK, Circuit Judge: 22 The defendant Francis S. Branin, Jr., a former 23 principal in an investment management firm, and his partners sold 24 their firm and its good will to another investment management 25 firm, the plaintiff Bessemer Trust Company, N.A. ("Bessemer"). 26 Soon dissatisfied with his employment at Bessemer, Branin left 27 and joined a competitor. 28 in search of their business directly, but he did respond to their 29 inquiries as to his status. 30 in-person meetings with respect to one client, and helped craft 31 his new firm's strategy for soliciting that client's business. He did not contact his former clients He also participated in at least two 2 1 When this client and several others stopped doing 2 business with Bessemer to do business with Branin's new firm 3 instead, Bessemer brought the instant lawsuit, alleging that 4 Branin had solicited his former clients at Bessemer in violation 5 of the doctrine established by Von Bremen v. MacMonnies, 200 N.Y. 6 41, 93 N.E. 186 (1910) and Mohawk Maintenance Co. v. Kessler, 52 7 N.Y.2d 276, 419 N.E.2d 324, 437 N.Y.S.2d 646 (1981) (the "Mohawk 8 doctrine"), which prohibits, in perpetuity, a voluntary seller of 9 a client's good will from improperly soliciting business from 10 that client after the client's business, including its good will, 11 is transferred to the purchaser. 12 against Bessemer for breach of contract, in quantum meruit, and 13 for promissory estoppel. 14 Branin filed counterclaims After a bench trial in the United States District Court 15 for the Southern District of New York, the court (John E. 16 Sprizzo, Judge) concluded that Branin had improperly solicited 17 one former client, but found insufficient evidence of improper 18 solicitation with respect to the others. 19 Branin's counterclaims, the court granted Bessemer summary 20 judgment dismissing them. 21 damages, the court adopted a "return of capital," rather than a 22 "lost profits," theory upon which it awarded Bessemer 23 $1,229,173.20 in damages and pre-judgment interest. 24 25 Instead of trying Finally, after a second trial on Branin appeals, contesting the finding of liability, the award of damages and the dismissal of his counterclaims. 3 1 Bessemer cross-appeals with respect to the calculation of 2 damages. 3 The principal legal question before us depends not on 4 interpretation of contract law, but on application of a branch of 5 New York tort law, the Mohawk doctrine. 6 guidance in New York case law to establish whether Branin's 7 behavior constituted actionable improper solicitation under that 8 law. 9 question. We find insufficient We therefore certify to the New York Court of Appeals that Inasmuch as an answer to this question is dispositive 10 of a finding of liability in this case, and is therefore also a 11 threshold question that must be answered before any damages may 12 be awarded, we need not, and choose not to, decide at this time 13 whether the district court properly calculated damages. 14 Branin's promissory estoppel and quantum meruit claims 15 have been waived on appeal. 16 breach of contract counterclaims because, for reasons we will 17 explain, as an at-will employee, he cannot prevail on them based 18 on diminution of his responsibilities and because his claim for 19 failure to provide an adequate bonus is without merit as his 20 offer letter explicitly vested Bessemer with the sole discretion 21 as to whether to pay him a bonus, and if so, in what amount. 22 23 We affirm the dismissal of his BACKGROUND Defendant Francis S. Branin, Jr., an investment 24 portfolio manager, joined the investment management firm of 25 Brundage, Story and Rose, LLC ("Brundage") in 1977, rose to the 26 level of principal in the firm by 1982, served as Chief Executive 4 1 Officer from 1996 until 2000, and at the time of the events in 2 question, held the largest share of the firm. 3 In October 2000, pursuant to a purchase agreement dated 4 August 18, 2000, (the "Purchase Agreement") Branin and the seven 5 other principals in Brundage sold the assets of the firm, 6 including its client accounts and related good will, to Bessemer 7 for more than $75 million. 8 ownership of Brundage and as one of the lead negotiators for 9 Brundage with respect to the sale, had substantial involvement in 10 arranging the sale. 11 Bessemer at will thereafter. 12 Branin, in view of his substantial the new firm. 13 All the principals were to be employed by They obtained no ownership stake in In an effort to ensure that the Brundage principals 14 devoted their energies to transferring their client accounts to 15 Bessemer and retaining those accounts, the Purchase Agreement 16 provided that only a portion of the purchase price would be 17 guaranteed -- an initial payment of $50 million, of which Branin 18 received more than $9.1 million and that further payments could 19 be earned upon the meeting of certain benchmarks for client 20 retention, revenue enhancements, and reduction of expenses. 21 Brundage principals thereafter earned two such contingency 22 payments, one for $10 million in September 2001 in return for 23 their meeting client account transfer benchmarks from Brundage to 24 Bessemer, and a payment of approximately $15 million in April 25 2002 because of a successful reduction of expenses. 26 received nearly one quarter of each of these two payments. 5 Branin The 1 It soon became clear, however, that Branin and the 2 other former Brundage principals would not be eligible for the 3 remaining two contingency payments, in large measure because one 4 of the former principals, Cheryl Grandfield, departed the firm in 5 January 2001. 6 her clients to follow her. 7 the ability of the remaining seven principals to meet the final 8 two contingency-payment benchmarks. 9 She actively and successfully solicited many of That had a serious adverse effect on Bessemer subsequently brought suit against Grandfield 10 for improper solicitation of clients, alleging the same principal 11 theory of liability that it asserts here. 12 that lawsuit, agreeing to repay her entire share of the payments 13 she had received from the sale of Brundage. 14 Grandfield settled Branin soon became unsatisfied with his role at 15 Bessemer. Several factors in addition to the fact that he would 16 not be eligible for any further contingency payments appear to 17 have contributed to his dissatisfaction at Bessemer. 18 to his role at Brundage, where he had actively managed the 19 portfolios of his clients, for example, at Bessemer, Branin was a 20 "client account manager" without the authority to make investment 21 decisions himself. 22 the Brundage transaction, Bessemer's CEO left the firm. 23 replacement reduced Branin's responsibilities, excluding him from 24 management meetings. 25 demotion. In contrast And less than two weeks after the closing of His Branin understood this effectively to be a 6 1 Branin was also apparently upset by the fact that 2 Bessemer had made minimal effort to introduce him to its new or 3 existing client base and did not involve him in any of the firm's 4 business development projects. 5 counterclaims in this case, when bonuses were distributed for 6 year-end 2001, Branin received a far smaller bonus as a 7 percentage of his potential target bonus than did the other 8 former Brundage principals.1 9 Finally, and relevant to Branin's Branin's Move to Stein Roe 10 Branin then engaged a consulting firm to explore 11 moving, with his business, from Bessemer to another firm. 12 consultants brought Branin to Stein Roe Investment Counsel LLC 13 ("Stein Roe"), a competing investment management firm. 14 several months, Branin and Stein Roe negotiated toward a possible 15 deal between them. 16 client base at Bessemer and touted his ability to bring his 17 Bessemer clients with him. 18 The For Branin explicitly described for Stein Roe his In or prior to June 2002, Branin agreed to move to 19 Stein Roe. At that time, Branin indicated to Stein Roe his hope 20 that within twelve months of joining the firm he would be able to 21 transfer $1.5 to $1.8 million of the approximately $2.3 million 22 in revenue that he was then generating for Bessemer to Stein Roe. 23 He informed Stein Roe that it was possible, however, that few or 1 Branin was also miffed that he had been excluded from a Bessemer holiday celebration despite the fact that each of the other former Brundage principals was invited. 7 1 none of his Bessemer clients would move their business. 2 his resignation from Bessemer, Branin refrained from contacting 3 any of his Bessemer clients to inform them of his impending move. 4 Prior to On July 12, 2002, Branin resigned from Bessemer. After 5 his resignation, Branin took limited action to assist Bessemer in 6 client retention, providing the firm with a memorandum profiling 7 each of his accounts and the contact person for each account. 8 Attempts To Bring Clients to Stein Roe 9 At the time Brundage was sold to Bessemer, Branin 10 managed about $450 million in investments, more than ten percent 11 of the approximately $4.1 billion managed by Brundage immediately 12 prior to the sale. 13 began crafting and implementing a strategy to entice Branin's 14 former Bessemer clients -- most or all of whom had come to 15 Bessemer with him from Brundage -- to move their business to 16 Stein Roe. 17 be charged to clients that followed Branin, under which clients' 18 fees would not thereby be increased. 19 initial success. 20 Branin's former clients, representing $205 million in assets, had 21 transferred their accounts from Bessemer to Stein Roe, accounting 22 for all but around $23 million of the assets Branin managed at 23 Stein Roe. 24 Once Branin joined Stein Roe, the company This strategy included a new schedule of fee rates to He and Stein Roe had some By the following summer, around thirty of Branin did not contact his clients directly to ask them 25 to follow him to Stein Roe. He did, however, respond to their 26 inquiries when they asked why he left and, if they requested 8 1 information about the new firm, he sent them material about his 2 new firm. 3 and order, Branin's "standard" answer to clients who asked why he 4 left Bessemer was that "'a firm like Stein Roe was far more 5 appropriate for me, . . . that the method of dealing with 6 clients, that the approach whereby portfolio managers managed the 7 client portfolios and interacted directly with the clients was 8 more . . . appropriate for my training and experience of 30 years 9 in the business.'" According to the district court's memorandum opinion Bessemer Trust Co., N.A. v. Branin, 427 10 F. Supp. 2d 386, 391 (S.D.N.Y. 2006)("Bessemer I") (quoting Joint 11 Statement of Undisputed Facts, Exh. A to Pre-Trial Order dated 12 August 3, 2004) ("Joint Statement of Undisputed Facts") (ellipses 13 in original). 14 approach would be better or more appropriate for any particular 15 client, nor is there evidence that Branin explicitly disparaged 16 Bessemer. 17 Branin did not say or suggest that Stein Roe's The evidence introduced at trial established that 18 Branin had individual meetings, either alone or with other Stein 19 Roe employees participating, with representatives of two former 20 clients with accounts at Bessemer: the Palmer family and Glen 21 Raven, Inc. 22 $117 million and $16 million, respectively. Their accounts were in the approximate amount of 23 The Palmer Family Account 24 The Palmer family had been a Brundage client since the 25 1930s. During the fifteen to twenty years Branin had managed the 26 account there, he developed a close friendship with Carleton 9 1 Palmer, III, who represented the family for these purposes. 2 two men, along with their wives and children, socialized and 3 vacationed together, and they owned homes in the same community 4 and jointly owned a small fishing boat. 5 The Branin nonetheless did not notify Carleton Palmer or 6 the Palmer family of his move from Bessemer to Stein Roe, nor did 7 he contact them directly after the move. 8 family first learned of Branin's change of employment through an 9 employee of Bessemer. 10 Indeed, the Palmer Upon learning of Branin's move to Stein Roe, Carleton 11 Palmer called Branin at his home to get his account of the 12 situation -- one that, Palmer testified, was very spare. 13 followed up with a letter requesting specific information as to 14 how the Palmer account might be handled at Stein Roe. 15 the Palmer family then scheduled back-to-back meetings on August 16 29, 2002, with Stein Roe and Bessemer to discuss the Palmer 17 account. 18 Palmer Members of In anticipation of the meeting and at Branin's 19 instance, Branin and other Stein Roe employees prepared "what he 20 described as a 'dog and pony [show]' for a 'LARGE client 21 relationship that I am hoping will join [Stein Roe].'" 22 I, 427 F. Supp. 2d at 391 (quoting Pl.'s Trial Ex. 103, e-mail 23 from Branin to Ronald Fisher and Eric Propper dated August 2, 24 2002) (first brackets added; block caps in original). 25 22, 2002, Stein Roe held a strategy session organized by Branin 10 Bessemer On August 1 during which he provided other Stein Roe employees with 2 information about Carleton Palmer and about the nature of, and 3 investment philosophy for, the Palmer account. 4 trial testimony of Carleton Palmer, during the subsequent meeting 5 between Palmer and Stein Roe, Branin "played almost no role," 6 Trial Tr. at 817, and "pretty much sat over in the corner and 7 kept quiet," id. at 776-77, other than to introduce Carleton 8 Palmer to the firm and "occasionally amplify a point if he knew 9 it was something [the Palmers] would be interested in," 10 According to the id. at 776. 11 Following the meetings, the Palmer family remained 12 unsure about whether to move their investment accounts to Stein 13 Roe. 14 specific proposal on behalf of that company, an invitation which 15 he accepted. 16 family that they would pay the same fees at Stein Roe that they 17 were then paying at Bessemer, and that the president of Stein Roe 18 would be the "number two" on the family account. 19 816. 20 moved their account to Stein Roe. 21 he chose Stein Roe over Bessemer because he was more impressed by 22 Stein Roe's senior management. 23 "a much more important client at Stein Roe" because the firm had 24 fewer large clients than Bessemer, making the family account "a 25 big fish in a small pond." 26 The Palmers therefore invited Branin to Ohio to make a During that visit, Branin informed the Palmer Id. at 787, The next day, on September 17, 2002, the Palmer family Carleton Palmer testified that He also thought that he would be Id. at 785. Branin's Assistant 11 1 It was important to Branin that his principal assistant 2 at Bessemer, Alexandra Fuhrmann, join him at Stein Roe. Shortly 3 after Branin informed his staff at Bessemer of his decision to 4 leave the firm, Fuhrmann contacted Stein Roe to seek employment 5 there. 6 there were no positions available. 7 was nonetheless invited to, and did, attend additional interviews 8 with the president of Stein Roe and others at the company. 9 interviews went poorly. Although granted an interview, she was initially told Three days later, Fuhrmann Her Interviewers thought that she had an 10 "unfortunate personality," and an "overly aggressive" demeanor, 11 and that "[i]n a vacuum, [Stein Roe] would never hire her." 12 Bessemer I, 427 F. Supp. 2d at 389 (internal citations omitted). 13 14 Nevertheless, on August 2, 2002, Fuhrmann was offered a 15 position as a vice president. 16 explained her hiring as a way to make Branin comfortable and to 17 assist in administrative work. 18 her primary responsibility would be "'to help [Branin] transition 19 as much of his client base to [Stein Roe] as possible,'" id. at 20 394 (quoting Pl.'s Trial Exs. 68, 89) (alteration in original), 21 and that this was part of the reason that Branin had recommended 22 she join Stein Roe, see Pl's Trial Ex. 69. 23 The president of Stein Roe However, it was understood that Meanwhile, Bessemer, unaware of Fuhrmann's attempts to 24 join Stein Roe, assigned her increasing responsibility in an 25 effort to retain Branin's clients, including promoting her to 26 senior client account manager with respect to several accounts, 12 1 and informing several customers that she would be assuming day- 2 to-day responsibility for their accounts. 3 Fuhrmann's supervisors at Bessemer, partner Paul Barkus, when 4 Fuhrmann subsequently left Bessemer to join Stein Roe, on August 5 2, 2002, her departure made Bessemer "'look[] kind of foolish to 6 the clients.'" 7 Tr. at 609). 8 reason that [Branin] and Stein Roe wanted her to go to Stein Roe 9 was to help [Branin] transfer accounts from Bessemer to Stein 10 Roe.'" According to one of Bessemer I, 427 F. Supp. 2d at 390 (quoting Trial And Barkus told Fuhrmann that he "'thought the only Id. (quoting Trial Tr. at 594) (alteration in original). 11 The Complaint and Counterclaims 12 On November 22, 2002, after Fuhrmann and several of 13 Branin's former Bessemer clients had departed the firm, Bessemer 14 filed the complaint in this action in the Supreme Court of New 15 York County. 16 breach of Branin's duty of loyalty to Bessemer based on Branin's 17 allegedly improper solicitation of clients and impairment of the 18 good will which Branin had sold to Bessemer in connection with 19 the sale of Brundage. 20 States District Court for the Southern District of New York on 21 diversity grounds. 22 contract relating to his position at Bessemer, breach of contract 23 with respect to his bonus, quantum meruit, and promissory 24 estoppel based on the sale of Brundage and his associated offer 25 of employment by Bessemer. 26 Bessemer asserted claims for breach of contract and Branin removed the case to the United He then filed counterclaims for breach of Motions and Trials 13 1 After pre-trial discovery was complete, the parties 2 each brought a motion for summary judgment. These were denied. 3 The case proceeded to a bench trial as to Branin's liability on 4 Bessemer's claim. 5 of post-trial memoranda of law, summations by the parties, oral 6 argument, and additional letter briefs, the district court issued 7 a memorandum opinion and order on April 10, 2006, concluding that 8 Branin violated New York law by impairing Bessemer's good will in 9 the Palmer account, but that Bessemer had not proven a violation Following the completion of trial, the filing 10 of law by a preponderance of the evidence with respect to any 11 other transferred account. 12 98. 13 Bessemer I, 427 F. Supp. 2d at 397- Bessemer then moved for summary judgment on Branin's 14 counterclaims. 15 opinion and order, the court granted Bessemer's motion. 16 Bessemer Trust Co., N.A. v. Branin, 498 F. Supp. 2d 632, 639 17 (S.D.N.Y. 2007) ("Bessemer II"). 18 employment contract was terminable at will and that Branin "had 19 no contractual right to a bonus above 0% of his salary and [that] 20 his bonus was clearly within the discretion of [Bessemer]," id. 21 at 639, the court concluded that Branin's counterclaims were 22 based on an "erroneous interpretation of the Purchase Agreement," 23 id. at 637. 24 In February 2007, and by a subsequent memorandum See Recognizing that Branin's The court then conducted a separate bench trial on 25 damages. It rejected Bessemer's "lost profits" theory of damages 26 and accepted Branin's "return of capital" theory, concluding that 14 1 Branin was liable to Bessemer in the amount of $826,335 plus 2 prejudgment interest of $402,838 for a total of $1,229,173. 3 Bessemer Trust Co., N.A. v. Branin, 544 F. Supp. 2d 385, 390-93 4 (S.D.N.Y. 2008) ("Bessemer III"). 5 Branin appeals as to the district court's finding of 6 liability with respect to the Palmer account, the award of 7 damages, and the grant of summary judgment dismissing his 8 counterclaims. 9 calculation of damages. Bessemer cross-appeals as to the district court's DISCUSSION 10 11 I. Standards of Review 12 "In reviewing a district court's decision in a bench 13 trial, we review the district court's findings of fact for clear 14 error and its conclusions of law de novo." 15 Food, 237 F.3d 174, 178 (2d Cir. 2001); accord Amalfitano v. 16 Rosenberg, 533 F.3d 117, 123 (2d Cir. 2008). 17 erroneous standard, there is a strong presumption in favor of a 18 trial court's findings of fact if supported by substantial 19 evidence. 20 with the definite and firm conviction that a mistake has been 21 committed. 22 omitted). 23 White v. White Rose "Under the clearly We will not upset a factual finding unless we are left White, 237 F.3d at 178 (internal quotation marks Similarly, in reviewing a grant of summary judgment, we 24 review questions of law and mixed questions of law and fact de 25 novo, McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 202, 204 26 (2d Cir. 2007), and review a district court's factual findings 15 1 for clear error, City of N.Y. v. Agni, 522 F.3d 279, 282 (2d Cir. 2 2008). 3 the nonmoving party," Mitchell v. Shane, 350 F.3d 39, 47 (2d Cir. 4 2003), we may affirm only "if the pleadings, the discovery and 5 disclosure materials on file, and any affidavits show that there 6 is no genuine issue as to any material fact and that the movant 7 is entitled to judgment as a matter of law." 8 56(c). 9 of the suit under the governing law.'" "[C]onstruing the evidence in the light most favorable to Fed. R. Civ. P. "[A] fact is 'material' if it 'might affect the outcome Mitchell, 350 F.3d at 47 10 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 11 (1986)). 12 that a reasonable jury could return a verdict for the nonmoving 13 party.'" 14 "A fact issue is 'genuine' if 'the evidence is such Id. (quoting Anderson, 477 U.S. at 248). Finally, with respect to the district court's 15 determination of damages, we review the legal question of the 16 applicable damages measurement de novo. 17 Bank of Baroda, 47 F.3d 490, 494 (2d Cir. 1995). 18 "the amount of recoverable damages is a question of fact," 19 however, that we review for clear error. 20 310 F.3d 243, 261 (2d Cir. 2002) (quotation marks omitted). See Indu Craft, Inc. v. The question of Lucente v. IBM Corp., 21 22 II. Improper Solicitation of Clients After Voluntary Sale of Good Will Under New York Law 23 The Mohawk doctrine, derived from the New York Court of 24 Appeals decisions in Von Bremen v. MacMonnies, 200 N.Y. 41, 93 25 N.E. 186 (1910) and Mohawk Maint. Co. v. Kessler, 52 N.Y.2d 276, 26 419 N.E.2d 324, 437 N.Y.S.2d 646 (1981), recognizes as part of 16 1 the common law of New York a "so-called 'implied covenant' [by a 2 seller] to refrain from soliciting former customers following the 3 sale of the 'good will' of a business," Mohawk, 52 N.Y.2d at 284, 4 419 N.E.2d at 328, 437 N.Y.S.2d at 650. 5 . . . precludes [the seller] from approaching his former 6 customers and attempting to regain their patronage after he has 7 purported to transfer their 'good will' to his purchaser." 8 see also Von Bremen, 200 N.Y. at 52, 93 N.E. at 190 (finding that 9 "a voluntary assignor of the good will of a business" may not "This 'implied covenant' 10 "solicit trade from [his] old customers"). 11 rule was described by reference to English common law in Von 12 Id.; Bremen: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 The basis for the "A man may not derogate from his own grant; the vendor is not at liberty to destroy or depreciate the thing which he has sold; there is an implied covenant, on the sale of good will, that the vendor does not solicit the custom which he has parted with; it would be a fraud on the contract to do so. . . . It is not right to profess and to purport to sell that which you do not mean the purchaser to have; it is not an honest thing to pocket the price and then to recapture the subject of sale; to decoy it away or call it back before the purchaser has had time to attach it to himself and make it his very own." 27 Von Bremen, 200 N.Y. at 50-51, 93 N.E. at 189 (quoting Lord 28 MacNaghten's opinion in Trego v. Hunt, (1896) 21 App. Cas. 7). 29 "[T]he right acquired by the purchaser of the 'good 30 will' of a business by virtue of this 'implied covenant' [is] a 31 permanent one [and] is not subject to divestiture upon the 32 passage of a reasonable period of time," since there is a 17 1 continuing duty upon the seller "imposed by law in order to 2 prevent the seller from taking back that which he has purported 3 to sell." 4 N.Y.S.2d at 651; accord Borne Chem. Co., Inc. v. Dictrow, 85 5 A.D.2d 646, 650, 445 N.Y.S.2d 406, 413 (2d Dep't 1981) ("A cause 6 of action for wrongful diversion of good will previously sold to 7 a plaintiff by a defendant sounds in breach of an implied 8 covenant of the contract of sale that the seller will permanently 9 refrain from soliciting his prior customers."). Mohawk, 52 N.Y.2d at 284-85, 419 N.E.2d at 329, 437 10 11 12 13 14 15 16 17 18 19 When the intangible asset of good will is sold along with the tangible assets of a business, the purchaser acquires the right to expect that the firm's established customers will continue to patronize the business. The essence of the transaction [of the sale of good will] is, in effect, an attempt to transfer the loyalties of the business' customers from the seller, who cultivated and created them, to the new proprietor. 20 Mohawk, 52 N.Y.2d at 285, 419 N.E.2d at 329, 437 N.Y.S.2d at 651 21 (internal citations omitted). 22 This duty of the seller not to solicit customers does 23 not, however, include an obligation not to accept such of his 24 former customers as may choose to follow him to his new 25 employment. 26 N.Y.S.2d at 652 (recognizing that the seller "may accept the 27 patronage of those customers who were actively dealing with [the 28 purchased company] on the date of the sale if such customers 29 choose to leave [the purchased company] without prompting from 30 [the seller]"). See id., 52 N.Y.2d at 287, 419 N.E.2d at 330, 437 18 1 The New York Court of Appeals has drawn an "important 2 distinction between the duty to refrain from soliciting 3 customers" on the one hand, which arises by operation of law upon 4 the sale of good will, and the "separate duty to refrain from 5 competing with the purchaser, which may only arise out of an 6 express agreement." 7 437 N.Y.S.2d at 650.2 8 acquires no legal right to expect that the seller will refrain 9 from engaging in a competing enterprise." Id., 52 N.Y.2d at 283, 419 N.E.2d at 328, "When a business is sold, the purchaser Id. Rather, "the 10 seller remains free to pursue his own economic interests without 11 restraint unless the purchaser has managed to extract from him an 12 express promise to refrain from competing." 13 the right to contract with the seller's former customers, 14 provided that there is no improper solicitation, and, "[i]ndeed, 15 the occurrence of a certain amount of attrition is one of the 16 risks that the purchaser must assume when he acquires an 17 established business." 18 437 N.Y.S.2d at 651. 19 the seller "did not come about through improper solicitation," 20 the implied covenant is not violated and the lost account "should 21 not be considered in ascertaining plaintiffs' damages." Id. This includes Id., 52 N.Y.2d at 285, 419 N.E.2d at 329, So long as the client's decision to follow 2 Hyde The parties might have, but did not, negotiate a noncompetition agreement upon the sale of Brundage to Bessemer. And competitive behavior does not, in and of itself, trigger application of the implied covenant attached to the sale of good will inasmuch as this "'implied covenant' imposes a much narrower duty than do express covenants purporting to restrict the seller's right to compete." Mohawk, 52 N.Y.2d at 284, 419 N.E.2d at 328, at 437 N.Y.S.2d at 650. 19 1 Park Prods. Corp. v. Maximilian Lerner Corp., 65 N.Y.2d 316, 322, 2 480 N.E.2d 1084, 1088, 491 N.Y.S.2d 302, 306 (1985). 3 The difficulty lies, of course, in determining what 4 actions constitute "improper solicitation," an issue upon which 5 New York courts offer somewhat limited guidance. 6 before us, Branin argues that he did not solicit any clients 7 because he was simply responding to their inquiries.3 8 counters that "even if a former customer made the initial 9 contact, Branin was prohibited from taking any action that would 10 tend in any way to exploit a client's established loyalties or to 11 prompt or encourage the client to leave Bessemer," Appellee's Br. 12 at 27-28, and that Branin could accept former clients' business 13 "only if they left Bessemer and joined him at Stein Roe 'without 14 prompting' or 'any act' from Branin," id. at 28. 15 court took a middle path, concluding that Bessemer had 16 established that Branin's solicitation was improper as to the 17 Palmer account, but that there was insufficient evidence to 18 demonstrate solicitation of any other account, including the Glen 19 Raven account, with whose representative Branin also met in 3 In the case Bessemer The district Branin also argues that his actions were permissible because they assisted the clients in making informed choices, as is each client's right under the Investment Advisor Act of 1940. Branin has cited no case law that suggests, let alone holds, that the right of the client to make an informed choice would permit improper solicitation of that client. The argument does not help answer the basic question: whether Branin improperly solicited his clients. 20 1 person while at Stein Roe.4 2 98. 3 Bessemer I, 427 F. Supp. 2d. at 395- We find no clear error in the district court's finding 4 of fact "that Branin intended to take his clients with him from 5 Bessemer to Stein Roe." 6 he "'had learned . . . the right way to transition clients from 7 Bessemer to another firm.'" 8 600). 9 in revenue from Bessemer to Stein Roe. Id. at 393. Branin himself stated that Id. (quoting Trial Tr. at 597, 599- He expressed his desire to transfer $1.5 to $1.8 million 10 Id. Once at Stein Roe, as noted above, Branin took actions 11 both to help Stein Roe solicit his clients and to frustrate 12 Bessemer's ability to retain them. 13 meeting for the express purpose of devising a strategy to solicit 14 the Palmer family business, requested a new schedule of fees for 15 his former clients so as to entice them to move, held in-depth 16 discussions with employees at Stein Roe in which he described his 17 clients at Bessemer and what would motivate them to move their 18 business to Stein Roe, and participated in both phone and in- 19 person meetings with his former clients during which he discussed 20 his reasons for moving from Bessemer to Stein Roe. 21 22 Most prominently, he called a Branin's principal assistant at Bessemer, whose intimate knowledge of Branin's clients would likely have been of 4 The district court also noted that Bessemer had not advanced, and the court therefore did not consider, any argument as to clients that left Bessemer but did not join Stein Roe, even though the court believed that such an argument could have been cognizable under Mohawk. Bessemer I, 427 F. Supp. 2d. at 395 n.8. 21 1 significant benefit to Bessemer in its effort to retain Branin's 2 accounts -- a fact of which Branin testified he was aware, was 3 hired by Stein Roe despite receiving thoroughly negative reviews 4 during her interviews and without having submitted any references 5 or recommendations, because the president of Stein Roe believed 6 that she could "help [Branin] transition as much of his client 7 base to [Stein Roe] as possible." 8 and citation omitted, alteration in original). 9 part of the reason that Branin initially suggested that Stein Roe Id. at 394 (quotation marks Indeed, this was 10 hire her, and her hiring was important enough to Branin that he 11 offered to pay a portion of her salary at Stein Roe out of his 12 own pocket. 13 The district court's not-clearly-erroneous finding was 14 that Branin's input helped "Stein Roe's presenters [to] steer[] 15 clear of topics in which Palmer had little interest and focus[] 16 only on those things that were of interest to him." 17 427 F. Supp. 2d at 396. 18 representative, testified that Branin "occasionally amplif[ied] a 19 point if he knew it was something I would be interested in from 20 his relationship with me." 21 traveled to Ohio for a second meeting with Palmer, in which he 22 presented the Palmer family with a proposed fee schedule and 23 promised the CEO of Stein Roe as the "number two" on the account. 24 Id. at 786-87. 25 26 Bessemer I, And Carleton Palmer, the family Trial Tr. at 776. Branin then None of this behavior by Branin requires a conclusion under New York law as we understand it, however, that Branin 22 1 "solicited" Palmer as a client. As the district court correctly 2 noted, other than Palmer and Glen Raven, Bessemer "has offered no 3 proof about which clients spoke to Branin before they transferred 4 their accounts, heard Branin's standard response, were familiar 5 with Fuhrmann, or knew that their fees would be the same at Stein 6 Roe." 7 clients at issue [been] party to these actions by defendant, no 8 evidence has been presented to show that these clients would not 9 have joined Branin absent these inducements." Bessemer I, 427 F. Supp. 2d at 395. Even had "all of the Id. And inasmuch 10 as the Palmer family transferred their account only after Stein 11 Roe was able to demonstrate, in a meeting in which Branin took 12 part, that the firm would be a superior investment manager in 13 light of the family's investment needs, we think it relevant that 14 New York law permits several steps Bessemer might have pursued to 15 protect itself in this regard, including non-competition and non- 16 solicitation agreements that could have been, but were not, 17 entered into with the Brundage principals at the time of the sale 18 of the firm to Bessemer. 19 The district court implicitly recognized what we think 20 to be so: The fact that Branin participated in the meetings 21 relating to the departure of the Palmer family to Stein Roe does 22 not necessarily demonstrate that he was engaged in improper 23 solicitation because, as was the case with the Glen Raven account 24 with respect to which Branin also held an in person meeting while 25 at Stein Roe, there is no conclusive proof or finding of a 26 causative link between what Branin did and the family's decision 23 1 to change investment advisors. 2 fact that Branin had participated in a meeting with Glen Raven 3 discussing the moving of the account to Stein Roe, that there was 4 no solicitation because Glen Raven "was intent on following 5 Branin regardless of any action or inaction on his part and 6 therefore nothing Branin did caused the transfer of the Glen 7 Raven account"). 8 well have followed in any event. 9 See id. (finding, despite the Under the circumstances, the Palmer family may The district court found that, "[t]aking all these 10 actions together," it had "no doubt that Branin stepped over the 11 line and improperly induced the Palmers to leave Bessemer and 12 join Stein Roe." 13 are far from passive acceptance of a client's inquiries, but we 14 lack the clarity of conviction of the district court on this 15 point.5 Id. at 396. We recognize that these actions 5 We also harbor a concern as to how our decision here might affect a situation where the defendant has left to establish his or her own, new business, rather than for another firm. In that case, former clients would indisputably be free to contact the start-up firm to discuss the prospect of transferring their accounts, provided that there was no improper solicitation on the hypothetical defendant's part. Unless we were to reach the highly unlikely conclusion that a voluntary seller of good will could never start a competing, solo practitioner business and receive former clients that wished to join him, then it seems to us that everything that Branin did here -- such as preparing an individualized sales pitch or presenting a new fee schedule -would have to be appropriate if done by a voluntary seller setting up his own solo business. It is not clear to us that the result should be different here solely because Stein Roe existed prior to Branin's move and because there are other employees who could have participated in the sales presentations and preparations. 24 1 The district court found the question of "initiation" 2 irrelevant to its analysis. See id. at 396 n.10 (finding that 3 "Von Bremen and Mohawk Maintenance Co. place no significance on 4 who initiates the communications between the seller of good will 5 and his now-former clients"). 6 broader concern was that "it would be bad faith" for the seller 7 "to avail himself as against the [buyer] of any special knowledge 8 or advantage derived by him from the business whose good will he 9 has voluntarily sold." In the court's view, Von Bremen's Id. at 396 (quoting Von Bremer, 200 N.Y. 10 at 52, 93 N.E. at 190) (quotation marks and emphasis omitted). 11 We read the New York case law differently. Inasmuch as 12 Von Bremen relied on bad faith, the reliance on bad faith was not 13 relevant to the solicitation analysis, but was instead part of a 14 separate discussion of the basis for the distinction between 15 voluntary and involuntary sales of good will and for applying the 16 implied covenant in the former case to the exclusion of the 17 latter. 18 contrary to the district court's suggestion that "initiation" is 19 of no special significance, the identity of the initiator has 20 been treated as both relevant and important for courts that have 21 applied the implied covenant. 22 forbidden action with words signifying direct initiation of 23 communication, such as "solicit," Von Bremen, 200 N.Y. at 48, 93 24 N.E. at 188; Mohawk, 52 N.Y.2d at 286, 419 N.E.2d at 329, 437 25 N.Y.S.2d at 651, "approach[]," Mohawk, 52 N.Y.2d at 284, 419 26 N.E.2d at 328, 437 N.Y.S.2d at 650; Slomin's, Inc. v. Gray, 176 See Von Bremen, 200 N.Y. at 51-52, 93 N.E. at 190. And, They have characterized the 25 1 A.D.2d 934, 936, 575 N.Y.S.2d 545, 547 (2d Dep't 1991); Kraft 2 Agency, Inc. v. Delmonico, 110 A.D.2d 177, 181, 494 N.Y.S.2d 77, 3 80 (4th Dep't 1985), "apply," Von Bremen, 200 N.Y. at 48, 93 N.E. 4 at 188, "specifically and directly appeal[]," id., 200 N.Y. at 5 50, 93 N.E. at 188, and "drum up or circularize," In re Brown, 6 242 N.Y. 1, 10 (1926) (Cardozo, J.). 7 Court of Appeals recognized that a previous attempt to divorce 8 solicitation from initiation that had been made by Lord Jessel in 9 Leggott v. Barrett, (1880) 15 Ch.D. 306 had been rejected by the In Von Bremen itself, the 10 higher court. 11 language of Mohawk is perhaps the most suggestive of the 12 importance of initiation in the application of the implied 13 covenant, since the court described the implied covenant as 14 "restrict[ing] the economic freedom of the seller only insofar as 15 it precludes him from approaching his former customers and 16 attempting to regain their patronage after he has purported to 17 transfer their 'good will' to his purchaser." 18 at 284, 419 N.E.2d at 328, 437 N.Y.S.2d at 650 (emphasis added). 19 And in the case before us, it is entirely clear that the Palmer 20 family, not Branin, initiated the contacts that led to the 21 transfer of its account to Stein Roe. 22 Von Bremen, 200 N.Y. at 48, 93 N.E. at 188. The Mohawk, 52 N.Y.2d We might make the assessments as to whether Branin's 23 efforts in following up on the Palmer family's initiation of 24 contacts constituted improper solicitation. 25 factual questions as to "initiation" and "causation" are 26 involved, we might return the case to the district court, asking 26 Or, insofar as 1 it for a more specific examination of those issues. 2 it difficult for either us or a district court to make that 3 determination in the absence of further explication as to the law 4 of the State of New York as to "improper solicitation" under 5 these circumstances. 6 New York, and New York law, in the financial services industry, 7 we think, and the New York Court of Appeals may agree, that it is 8 that court which should make this determination in the first 9 instance. 10 But we find Especially in light of the importance of Generalizing, we seek instruction as to whether two 11 sets of actions, taken together, amount to "improper 12 solicitation" under the law of the Mohawk doctrine: (1) the 13 active development and participation by the seller, in response 14 to inquiries from a former client whose good will the seller has 15 voluntarily sold to a third party, of a plan whereby others at 16 the seller's new company solicit a client, and (2) participation 17 by the seller in solicitation meetings where the seller's role is 18 largely passive. 19 III. Damages 20 Following a two-day trial on damages, the district 21 court rejected Bessemer's "lost profits" theory of damages and 22 accepted Branin's "return of capital" theory, concluding that 23 Branin was liable to Bessemer on the breach of contract claim in 24 the amount of $1,229,173: $826,335 damages and $402,838 25 prejudgment interest. 26 Both parties challenge this finding. Bessemer III, 544 F. Supp. 2d at 393. 27 Branin argues that there 1 should be no damage award because Bessemer did not prove a causal 2 link between the breach and Bessemer's injury. 3 that the district court erred in accepting Branin's "return of 4 capital" theory rather than its own "lost profits" theory. 5 Bessemer argues Since we are certifying the threshold question of 6 whether Branin is liable to Bessemer for improper solicitation, 7 we need not reach th question of how Bessemer's damages should be 8 calculated, and thus reserve judgment on that issue. 9 do consider Branin's argument that, even if he breached the However, we 10 contract, the breach was harmless, because such a finding would 11 obviate the need to determine liability. 12 argument upon the district court's observation that it was 13 "really hav[ing] difficulty believing that [Palmer] was going to 14 stay with [Bessemer] given what he thought of [its] people. . . . 15 Even assuming that he was not going to go over to Branin, he was 16 not going to stay with Bessemer." 17 Appellant's Br. at 17 n.5. 18 because it overlooks the fact that the district court made at 19 least two explicit findings on the issue. 20 F. Supp. 2d at 389 n.8 (finding "that defendant's conduct played 21 a role, but not the sole role in Palmer leaving Bessemer"); 22 Bessemer I, 427 F. Supp. 2d at 396 (finding that Bessemer "has 23 carried th[e] burden" to "prove that Branin's improper actions 24 caused Palmer to move his account from Bessemer to Stein Roe"). 25 As Branin has demonstrated no clear error in these findings of 26 fact, we reject his argument that Bessemer has failed to prove Branin bases this Trial Tr. at 1060, quoted in We find this argument unpersuasive 28 See Bessemer III, 544 1 that, provided Branin is liable, damages would be greater than 2 "zero." 3 We reserve decision on the correct method for the 4 calculation of damages until we receive further guidance from the 5 New York Court of Appeals on liability, and, if it wishes, on 6 damages, should the court choose to accept the question that we 7 certify. 8 IV. Branin's Counterclaims 9 Branin asserted four counterclaims in the district 10 court: breach of contract with respect to his position at 11 Bessemer, breach of contract as to his bonus, quantum meruit, and 12 promissory estoppel based on the sale of the business and his 13 offer of employment by Bessemer. 14 only with respect to the district court's grant of summary 15 judgment on his breach of contract claims. 16 and promissory estoppel arguments are therefore waived. See 17 Norton v. Sam's Club, 145 F.3d 114, 117 (2d Cir. 1998). And we 18 find no error in the district court's rejection of Branin's 19 remaining breach of contract claims. 20 A. 21 On appeal, Branin alleges error The quantum meruit Breach of Bonus Plan Exhibit D to the Purchase Agreement sets out the 22 criteria by which Branin's cash bonus was to be determined. 23 Specifically, that exhibit provides that while Branin is 24 "eligible for participation in the Incentive Cash Bonus Plan[, 25 t]he amount of the bonus is at the discretion of the Salary 29 1 Committee, and at this time has a range of 0% to 250% of base 2 pay." Purchase Agreement, Ex. D, at 1. 3 Branin alleges that at the end of 2001, the other 4 former Brundage principals received bonuses amounting to between 5 ninety-two and more than one-hundred percent of the maximum 6 bonuses provided for in Exhibit D to the Purchase Agreement. 7 asserts that he received instead only twenty percent of his 8 potential bonus (slightly more than fifty percent of his base 9 salary). He He alleges that this constitutes a breach of Exhibit D. 10 The district court rejected this claim on the ground that the 11 same agreement expressly "allows for a discretionary bonus range 12 between 0% and 250% of his salary," Bessemer II, 498 F. Supp. 2d 13 at 638, and Branin's bonus, at more than fifty percent of his 14 salary, "was within this range," id. 15 Branin concedes that under New York law "the insertion 16 of the word discretion into a bonus arrangement signals the end 17 to any possible challenge to a bonus determination," Appellant's 18 Br. at 60, but argues that the allowance for discretion does not 19 settle the matter here. 20 included a "detailed written bonus plan incorporating explicit 21 objective criteria and procedures." 22 persuasive authority to support his theory. He asserts that the Purchase Agreement Id. Branin provides no 23 In Valentine v. Carlisle Leasing Int'l Co., No. 97 Civ. 24 1406, 1998 WL 690877, 1998 U.S. Dist. LEXIS 15581 (N.D.N.Y. Sept. 25 30, 1998), on which Branin relies as support for his argument, 26 the court reached precisely the opposite result from that which 30 1 Branin seeks here. 2 "clearly stated" that the employer "would retain absolute 3 discretion to determine both whether [the plaintiff] would 4 receive a bonus and, if so, how much he would receive." 5 1998 WL 690877, at *4, 1998 U.S. Dist. LEXIS 15581, at *11. 6 light of this explicitly conferred discretion, the court held 7 that the plaintiff had no right to have the bonus terms enforced. 8 The court considered an offer letter that Id., In Id. 9 To be sure, in reaching this conclusion, the Valentine 10 court noted in dicta that the employee's letter conferring 11 employment "indicated only generally that [the employee's] 12 entitlement to a bonus would depend on his performance and that 13 of the company but did not set forth objective criteria on which 14 [the employer] would base its decision." 15 seize on this language in Valentine to argue that where, as here, 16 objective criteria are present, the failure to provide a bonus 17 that meets those criteria is actionable despite the fact that 18 discretion to provide a bonus was explicitly reserved by the 19 employer. But, Valentine does not stand for the proposition 20 offered. The dicta relied on by Branin did nothing more than 21 explain the many ways in which the employer reserved discretion 22 for itself. 23 Id. Branin attempts to Exhibit D to the Purchase Agreement that Branin seeks 24 to enforce here expressly states that its terms "do not and are 25 not intended to create either an expressed or implied employment 26 contract." Purchase Agreement, Ex. D at 2. 31 Exhibit D expressly 1 states that any bonus to be awarded is "at the discretion of the 2 Salary Committee." 3 reading of these clauses as dispositive of Branin's claim: 4 reserve to the Salary Committee the decision to award or not to 5 award a bonus, and in what amount. 6 B. 7 Id. We find no error in the district court's They Breach of Purchase Agreement The Purchase Agreement required that Branin be given a 8 position at Bessemer "generally comparable" to his former 9 position at Brundage. Purchase Agreement, § 7.01(vii). The 10 parties agreed upon what that position would be, the title of 11 Managing Director, the base salary and bonus range, the terms of 12 vacation time, and the form and scope of other benefits. 13 does not dispute that he received all that was agreed upon in 14 this respect. 15 district court, and continues to argue here, that he suffered 16 "diminished responsibilities, exclusion from meetings, and 17 effective demotion throughout his time at Bessemer." 18 II, 498 F. Supp. 2d at 635. 19 responsibilities, Branin maintains that "questions of fact exist 20 as to whether there was a material diminution in Mr. Branin's 21 duties and responsibilities subsequent to the closing." 22 Appellant's Br. at 63. Branin Branin nonetheless continued to argue to the Bessemer Because of these alleged diminished 23 The district court rejected this argument, concluding 24 that even had Branin suffered the demotion and other grievances 25 he alleges, Bessemer would not have breached any term of the 32 1 Purchase Agreement or offer letter by doing so. 2 F. Supp. 2d at 635-36. 3 Bessemer II, 498 We agree. Branin characterizes the Purchase Agreement's 4 requirement that he be provided with a role that was "generally 5 comparable" to the role he had at Brundage as "a commitment that 6 so long as Mr. Branin remained in Bessemer's employ, he would 7 function in a comparable position with commensurate authority." 8 Appellant's Br. at 64. 9 Rather, the contract provides as a condition precedent to closing But that is not what the contract says. 10 that the Brundage principals, Branin among them, accept in 11 writing the terms of employment offered by Bessemer for a 12 generally comparable position prior to the closing date. 13 is no allegation that this condition was not fulfilled. 14 Branin seems to concede as much in his admission that his 15 "employment at Bessemer was not subject to a definite duration." 16 Id. 17 were subject to change or termination based on the needs and 18 desires of his employer. 19 1285, 1294-95 (2d Cir. 1996) (noting that, with limited 20 exceptions not relevant here, under New York law, "an employee 21 serving purely at will, by definition, has no contractual right 22 to avoid dismissal"). 23 Bessemer, it seems to us, the lesser action of changing his role 24 at the firm, subject of course to his choosing to depart at his 25 option instead, was permissible too. 26 There And Branin was thus essentially an at-will employee whose duties Cf., e.g., Finley v. Giacobbe, 79 F.3d If he could be dismissed at will by V. Certification to the New York Court of Appeals 33 1 Under the rules of this Circuit, "[i]f state law 2 permits, the court may certify a question of state law to that 3 state's highest court." 4 Port Auth. of N.Y. & N.J., 315 F.3d 146, 150-51 (2d Cir. 2002). 5 Certification is within the discretion of this Court. 6 McCarthy v. Olin Corp., 119 F.3d 148, 153 (2d Cir. 1997). 2d Cir. R. 27.2(a); see also Prats v. See 7 In the past, we have recognized several factors that 8 guide our decision of whether to certify a question to the New 9 York Court of Appeals. First, and most important, we have 10 recognized that certification may be appropriate if the New York 11 Court of Appeals has not squarely addressed an issue and other 12 decisions by New York courts are insufficient to predict how the 13 Court of Appeals would resolve it. 14 Slamowitz, LLP, 579 F.3d 189, 198 (2d Cir. 2009); O'Mara v. Town 15 of Wappinger, 485 F.3d 693, 698 (2d Cir. 2007). 16 insufficient guidance in past New York cases regarding the 17 application of the Mohawk doctrine to determine how it would be 18 applied to the facts of this case. 19 think that because of the prominence of the financial services 20 industry in the State of New York, clarification of New York law 21 on the issues presented in this case would be of significant 22 public interest. See Kuhne v. Cohen & We find And, as we have noted, we 23 Second, certification may be appropriate where 24 resolution of an issue involves value judgments and public policy 25 choices that the New York Court of Appeals is best situated to 26 make. See Colavito v. N.Y. Organ Donor Network, Inc., 438 F.3d 34 1 214, 229 (2d Cir. 2006); Blue Cross & Blue Shield of N.J., Inc. 2 v. Phillip Morris USA, Inc., 344 F.3d 211, 221 (2d Cir. 2003). 3 We think that the New York Court of Appeals is better positioned 4 to determined the scope of permissible solicitation under New 5 York law of former clients by voluntary sellers of those clients' 6 good will. 7 Finally, we have found certification appropriate where 8 the question certified will determine the outcome of the case. 9 See O'Mara, 485 F.3d at 698 (analyzing earlier version of the 10 Second Circuit local rule governing certification). 11 resolution of the question of the scope of the Mohawk doctrine 12 will determine our resolution of the question of liability and 13 therefore control the outcome of this appeal of the district 14 court's decision. 15 Here, Because each of these factors suggests that 16 certification is appropriate, we hereby certify the question 17 restated below. 18 19 CONCLUSION For the foregoing reasons, we certify the following What degree of 20 question to the New York Court of Appeals: 21 participation in a new employer's solicitation of a former 22 employer's client by a voluntary seller of that client's good 23 will constitutes improper solicitation? 24 interested in how the following two sets of circumstances 25 influence this analysis: (1) the active development and 26 participation by the seller, in response to inquiries from a 35 We are particularly 1 former client whose good will the seller has voluntarily sold to 2 a third party, in a plan whereby others at the seller's new 3 company solicit the client, and (2) participation by the seller 4 in solicitation meetings where the seller's role is largely 5 passive. 6 New York Court of Appeals' analysis based on the facts of the 7 case through the formulation of this question, and we invite the 8 Court of Appeals to expand upon or alter the question as it may 9 deem appropriate. 10 11 We do not intend to in any way limit the scope of the See Kirschner v. KPMG LLP, 590 F.3d 186, 195 (2d Cir. 2009). Pursuant to New York Court of Appeals Rule 500.17 and 12 United States Court of Appeals for the Second Circuit Rule 27.2, 13 it is hereby ORDERED that the Clerk of this Court transmit to the 14 Clerk of the Court of Appeals of the State of New York this 15 opinion as our certificate, together with a complete set of the 16 briefs, appendix, and record filed in this Court by the parties. 17 We direct the parties to bear equally any fees and costs that may 18 be imposed by the New York Court of Appeals in connection with 19 this certification. 20 appeal after disposition of this certification by the New York 21 Court of Appeals, and after the Court of Appeals' judgment should 22 it choose to accept this certification. This panel will retain jurisdiction of the 36

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