Massachusetts Federal Court Rejects Disgorgement Theory Based On Alleged Cost Savings Under Chapter 93A

In this matter pending before the U.S. District Court for the District of Massachusetts, plaintiff Crosby Legacy Company, LLC, doing business as Philip Crosby Associates, brought claims against defendant TechnipFMC plc, alleging, among other things, Chapter 93A violations. A key issue in the damages dispute was Crosby’s contention that Technip, through the alleged unauthorized use of Crosby’s proprietary materials, developed an internal training program that generated company-wide efficiency savings of approximately $40 million. Crosby sought to recover those alleged savings through a disgorgement theory of damages supported by expert testimony. 

Technip moved in limine to exclude the expert’s disgorgement testimony, arguing that Massachusetts law does not entitle Crosby to recover such alleged savings as a remedy. The court agreed and allowed the motion. When Crosby moved for reconsideration, the court denied that motion and reaffirmed its earlier ruling, addressing the availability of disgorgement as a remedy under Chapter 93A. 

The court held that while disgorgement of profits is not categorically prohibited as a measure of damages under Chapter 93A, it is disfavored where a measurement of lost profits is readily available to the plaintiff. The court noted that disgorgement is not awarded simply because a plaintiff characterizes a defendant’s conduct as unfair or deceptive. The court distinguished between a defendant that has realized identifiable profits as a direct result of alleged wrongful conduct and a defendant that has realized internal cost savings not directly traceable to profits belonging to or reasonably anticipated by the plaintiff. Because Crosby could only point to savings that Technip realized on a company-wide basis, rather than profits in the traditional sense, the court found the disgorgement theory legally unavailing under Chapter 93A. 

The decision indicates that a Chapter 93A claimant may not use disgorgement to recover damages that bear no direct relationship to profits or benefits the plaintiff would have received absent the alleged misconduct.