Opposition Brief — Bikinian v. Astra USA, Inc.

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“Supreme Court, U.S.

FILED

APR 2- 2010

OFFICE OF THE CLERK

No. 09-1057

IN THE

Supreme Court of the GAnited States

LARS P. E. BILDMAN,

Petitioner,

¥.

ASTRA USA, INC.,

Respondent.

On Petition For A Writ Of Certiorari To The

Massachusetts Supreme Judicial Court

RESPONDENT'S BRIEF IN OPPOSITION TO

THE PETITION FOR WRIT OF CERTIORARI

JEFFREY S. ROBBINS

A. W. PHINNEY, III*

JOSEPH D. LIPCHITZ

MINTZ, LEVIN, COHN, FERRIS,

GLOVSKY AND POPEO, P.C

One Financial Center

Boston, MA 02111

(617) 542-6000

AWPhinney@mintz.com

*Counsel of Record for

April 2, 2010 Respondent

WILSON-EPES PRINTING CO , INC. — (202) 789-0096 — WASHINGTON, D.C. 20002

QUESTIONS PRESENTED

1. Whether the Massachusetts Supreme Judicial

Court erred in applying this Court’s precedent to the

record in this case and ruling that Petitioner, the

former Chief Executive Officer of a major pharma-

ceutical company who had first assembled a team of

public relations consultants to manage an emerging

BusinessWeek cover story about his misconduct and

then, after publication of the BusinessWeek story and

widespread media stories about former employees’

public allegations against him and an EEOC investi-

gation, contacted media outlets to comment on the

controversy, qualified as a limited purpose public

figure with respect to this matter.

2. Whether by failing to raise his argument that

corporations are not entitled to First Amendment

protection in the Massachusetts courts, Petitioner

has waived his right to raise that argument here,

and whether, even if not waived, his argument is

erroneous.

3. Whether, even if the Supreme Judicial Court

had erred in applying this Court’s limited purpose

public figure precedent to the record before it, there

were adequate and independent state grounds under

Massachusetts law for the judgment in favor of

Respondent on Petitioner’s negligent libel claims.

(i)

PARTIES TO THE PROCEEDING

The Petitioner in this case is Lars P.E. Bildman,

who was Astra USA, Inc.’s President and Chief

Executive Officer from 1981 until his termination in

1996. The Respondent is Astra USA, Inc. (“Astra”),

which at all relevant times during the underlying

litigation was a wholly-owned American subsidiary of

Astra AB, a Swedish publicly-traded company.

Although Bildman brought claims in the trial court

against Astra AB and two of its corporate officers, as

well as Astra, the trial court dismissed Astra AB as a

party before summary judgment for lack of personal

jurisdiction. The two officers were Dr. Haken

Mogren and Carl-Gustaf Johansson, who were also

members of Astra’s Board of Directors. Bildman sued

them for libel and tortious interference with contrac-

tual relations. The trial court dismissed the libel

claims against Mogren and Johansson at summary

judgment. At trial, the jury found in favor of Mogren

and Johansson on Bildman’s tortious interference

claims.

In his Amended Notice of Appeal dated October

24, 2007, which was filed with the Massachusetts

Appeals Court, Bildman withdrew his appeal of the

various rulings and judgments in favor of Astra AB,

Mogren and Johansson. As a result, only Astra and

Bildman were parties to the appeal before the Massa-

chusetts Supreme Judicial Court and are the only

parties before this Court.

lll

CORPORATE DISCLOSURE STATEMENT

In accordance with United States Supreme Court

Rule 29.6, Respondent Astra USA, Inc. states that it

is a wholly-owned subsidiary of AstraZeneca Trea-

sury Limited, which is, in turn, owned by Astra-

Zeneca UK Limited, a subsidiary of AstraZeneca

Intermediate Holdings Limited. AstraZeneca PLC, a

publicly-traded company, owns AstraZeneca Inter-

mediate Holdings Limited and, through the subsidi-

aries identified above, indirectly controls more than

10% of the stock of Astra USA, Inc.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ................0..cccesceeeees i

PARTIES TO THE PROCEEDING.................... il

CORPORATE DISCLOSURE STATEMENT..... ill

py Fe hy 8 cy: eae Viil

STATEMENT OF THE CASE ........................200 3

BusinessWeek Investigates Allegations That

Bildman Had Sexually Harassed Astra

SN Rie AN a NSC A Ae RN ERODE D

Bildman Assembles A Media “Task Force” In

I rg ni iad a purcdlatondnanienieinnnesrs 5

In April 1996, Bildman Directs His Task

Force To Meet With BusinessWeek To

Influence The Emerging Story..................... 6

Astra Suspends Bildman And Begins Its

ee tres estntericcenbnniapernioriens 7

After Bildman’s Suspension, Numerous

Media Articles Are Published Concerning

Bildman’s Suspension And The Numerous

Public Lawsuits That Had Been Filed

Alleging Sexual Harassment By Bildman... 8

Before The BusinessWeek Publication, Bild-

man Actively Communicates With The

Media To Influence The Public

SAME APES ROTI A TTP 8

The Publication Of “Abuse Of Power” Gene-

rates Media Stories To Which Bildman

Responds, As Well As An EEOC

i Go 9

TABLE OF CONTENTS—Continued

Astra’s Internal Investigation Reveals

Extensive Misconduct By Bildman Lead-

ing To His Termination For Cause..............

Astra Commences The Underlying Lawsuit

Against Bildman, And Bildman Counter-

claims, Inter Alia, For “Negligent Libel”.....

The SJC Affirms The Trial Court’s Grant Of

Summary Judgment On Bildman’s Negli-

gent Libel Claim

PT TIE oisiccihsctencecnicsniineigcionseme

I. THIS CASE DOES NOT MERIT RE-

VIEW BECAUSE THE SJC PROPERLY

STATED AND APPLIED THIS COURT'S

PRECEDENT IN HOLDING THAT

BILDMAN WAS A LIMITED PURPOSE

POPPE © FR Ris 0r008000sse0e

Il. THIS CASE DOES NOT MERIT RE-

VIEW BECAUSE BILDMAN’S CON-

TENTION THAT THE FIRST AMEND-

MENT DOES NOT PROTECT ASTRA

(1) HAS BEEN WAIVED AND (2) IS

FEUER PTET Os orien scvarcivnnssesdecceae

lil. THIS CASE DOES NOT MERIT RE-

VIEW BECAUSE THERE ARE TWO

ADEQUATE AND INDEPENDENT

STATE GROUNDS UNDER MASSA-

CHUSETTS LAW FOR THE SJC’S RE-

JECTION OF BILDMAN’S NEGLI-

GENT LIBEL CLAIMG. ................cceseseess

ee eee eee eee eee.

Page

Vill

TABLE OF CONTENTS—Continued

A. The Jury’s Answers To Special Ques-

tions Established Astra’s Conditional

Privilege To Comment On Its Investiga-

tion Into Its Former CEO’s Misconduct,

And Imposed An Independent Burden

On Bildman To Adduce The Requisite

Evidence Of Actual Malice. ......................

B. The Jury Verdict And Its Answers To

Special Questions Also Established The

Substantial Truth Of Astra’s Purpor-

tedly Actionable Statements. ...................

Neen ia ceceensansinenieenaeanwenes ea

aii a aisnliskabanedhescasbhceveencweeserestes

APPENDIX A: Memorandum Of Decision

And Order On Parties’ Motions For Sum-

mary Judgment, dated October 29, 2001 ....

APPENDIX B: Suffolk Superior Court Spe-

cial Question Verdict Form, dated Febru-

Neen nie in sa usuetedadvwubiwite ace

APPENDIX C: Final Judgment After Re-

script, dated January 6, 2010......................

Page

Vill

TABLE OF AUTHORITIES

CASES Page

Astra USA, Inc. v. Bildman, 455 Mass.

116, 914 N.E. 2d 36 (2009) ...................+00. passim

Bratt v. International Business Machines

Corp., 392 Mass. 506 (1964) ........0000000.0.... 28, 29

Brewster Wallcovering Co. v. Blue Moun-

tain Wallcoverings, Inc., 68 Mass. App.

i I cectecetice nna liacnuloniecogubatenmieneis 32

Broomes v. Blue Cross Blue Shield of Mas-

sachusetts, Inc., 74 Mass. App. Ct. 1123,

2009 WL 1953006 (Mass. App. Ct. July

iy coi caticitcedetiednarctaksmebcimmuineltadtas 29

Citizens United v. Federal Election Com-

mission, —U.S.—, 130 S.Ct. 876 (2010)... 25

Dragonas v. School Committee of Melrose,

64 Mass. App. Ct. 429 (2005)........cccceceeee. 30

First Nat. Bank of Boston v. Bellotti, 435

Be ee i citindscakssconstceluntcaniestide diamant: 25

Florida v. Powell, —U.S.—, 130 S.Ct. 1195

SEITE Sicksntccchinstesoasiitersunntinssonpeneeiauaniineaiacemematnet. 27

Gertz v. Robert Welch, Inc., 418 U.S. 323

CE incicieusiescentecedenmibedie Zz, 13, 16, 16, 20, 21, 23

Gray v. St. Martin’s Press, Inc., 221 F.3d

Be © RAs Se ithskickenencutadeclahonesnckavanieae 18

Herb v. Pitcairn, 324 U.S. 117 (1945).......... 27

Hutchinson v. Proxmire, 443 U.S. 111

|. he SRE Ie ARE CRE Ret 21. 22, 23, 27, 3

Kyle v. Mongan, 72 Mass. App. Ct. 1111,

2008 WL 2951800 (Mass. App. Ct. Aug.

TABLE OF AUTHORITIES—Continued

Page

Lazzara v. Wyle Electronics Co., 56 Mass.

App. Ct. 1112, 2002 WL 3169483 (Mass.

Pa, Sc SE bide tentanpa ssa touaribavsemtreurats 24

Mason v. New Yorker Magazine, Inc., 501

BF Be TE iar deesdevesucs eaievarddeetstcadeceniee 33

Michigan v. Long, 463 U.S. 1032 (1983)...... 26, 27

Plucket v. United States, —U.S.—, 129 S.Ct.

ESR aber oa Ree LEA PLN LARA 24

Reilly v. Associated Press, 59 Mass. App.

oe Fee III oasis. or ceca pnude senscmumnensouusnadeaes 33

Sklar v. Beth Israel Deaconess Medical

Center, 59 Mass. App. Ct. 550 (2003)....... 30

Time, Ine. v. Firestone, 424 U.S. 448

), | RIESE REDE RRR eae os enen oh aRenn soar enane 20, 22, 23

Tripoli v. Boston Herald-Traveler Corp.,

UI BO CEE ED dri sscenvecsesiverercerevertinee 19

Wolston v. Readers Digest Association, 443

ee ee Ci iairsoratsconensseneursnennceues 20, Zi, 2a, Zi

Zortman v. Bildman, 1999 WL 1318959

(Mass. Super. Ct. Jan. 15, 1999).............. 9

CONSTITUTION

Rp SERRE aies Me Reale te at 2.4, 25

RULES

is Wis, Si iccatecnipanseaicendanakceaianmmetansscousnie 2, 15

TABLE OF AUTHORITIES—Continued

Page

OTHER AUTHORITIES

E. Gressman, K. Geller, S. Shapiro, T.

Bishop, E. Hartnett, Supreme Court

FES Cre Gs Bee ED cscecensoctecncnsovccssesccess 26

Justice Brennan, State Court Decisions

and the Supreme Court, 31 Penn. Bar.

FR SE, ee CREE dennstccdcisrsecscescenseD series 26

IN THE

Supreme Court of the Anited States

No. 09-1057

LARS P. E. BILDMAN,

Petitioner,

Vv.

ASTRA USA, INC.,

Respondent.

On Petition For A Writ Of Certiorari To The

Massachusetts Supreme Judicial Court

RESPONDENT'S BRIEF IN OPPOSITION TO

THE PETITION FOR WRIT OF CERTIORARI

Pursuant to United States Supreme Court Rule

15, Astra opposes Bildman’s petition for a writ of

certiorari. Bildman seeks to have this Court review

the Massachusetts Supreme Judicial Court’s decision,

published as Astra USA, Inc. v. Bildman, 455 Mass.

116 (2009), which affirmed the trial court’s grant of

summary judgment dismissing Bildman’s negligent

libel claims against Astra. Bildman’s libel claims were

based on statements made by Astra concerning its

investigation into Bildman’s misconduct as its CEO

after BusinessWeek published a cover story about

allegations that Bildman had sexually harassed

numerous female employees.

The Massachusetts Supreme Judicial Court (“SJC”)

affirmed the trial court’s ruling that Bildman was a

limited purpose public figure at the time of Astra’s

statements under the standard articulated in Gertz v.

Robert Welch, Inc., 418 U.S. 323 (1974), and that he

had failed to sustain his burden at summary

judgment of adducing evidence sufficient to satisfy

the actual malice standard imposed on_= such

plaintiffs. Bildman did not below, and does not here,

challenge the trial court’s ruling that he had failed to

adduce evidence of actual malice, but rather confines

his appeal to the SJC’s ruling that he was a limited

purpose public figure.

Bildman’s petition should be denied based on four

separate grounds, each of which demonstrates that

there is no compelling reason to justify review of this

matter. See S. Ct. R. 10. First, Bildman’s petition

rests on the alleged misapplication of the properly-

stated rule of law governing limited purpose public

figures. Id. (a “petition...is rarely granted when the

asserted error consists of...the misapplication of a

properly stated rule of law”).

Second, the SJC in fact properly applied this Court’s

precedent in holding that Bildman was a limited

purpose public figure on the record in this case.

Third, Bildman has waived his contention that the

First Amendment’s protections do not extend to

corporations, which, in any event, is without merit.

Fourth, there exist two adequate and independent

state grounds under Massachusetts law that fully

support the SJC’s decision affirming the dismissal of

Bildman’s negligent libel claims.

STATEMENT OF THE CASE

On February 21, 2002, a Massachusetts jury

returned a special verdict answering the Court’s

twenty-five (25) special questions, doing so in Astra’s

favor in the case of all but one. It found that

Bildman, while Astra’s President and CEO, had

committed fraud, waste, conversion of Astra’s assets

and breaches of his fiduciary duty to Astra, and that

he had also engaged in sexual harassment of, and

improper retaliation against, Astra employees. The

jury also upheld Astra’s 1996 termination of Bildman

for cause. It awarded Astra a total of $1,040,842 in

damages.’ See R5658; R6680.

Astra adopts and incorporates by reference the

factual summary contained in the SJC’s opinion

(hereinafter “the SJC decision”) at 455 Mass. 116,

119-127, 914 N.E. 2d 36, 40-45 (2009). The SJC’s

factual summary was based “on the evidence pre-

sented to the jury and the judge’s findings on the

remainder, which we supplement with uncontroverted

material from the record.” Jd. at 119.’

Because Bildman did not challenge the jury verdict

in Astra’s favor on appeal, and does not here

challenge any aspect of the SJC decision except that

which upheld summary judgment in Astra’s favor on

Bildman’s negligent libel claims, Astra summarizes

herein only that portion of the record most germane

to Bildman’s petition, which is confined to one issue

1 The jury also found that Bildman was entitled to a stock

grant in the amount of $203,691, which amount was subsequently

set off against Astra’s verdict. Astra USA, Inc. v. Bildman, 455

Mass. 116, 117-118 (2009).

2 References to the record before the SJC are cited herein as

“R by

determined by the trial court in entering summary

judgment for Astra on those claims. That issue is

whether the SJC properly applied this Court’s

precedent on when a defamation plaintiff qualifies as

a limited purpose public figure to the record before it.°

Astra also sets forth the factual background germane

to the question of whether, even if Bildman was not a

limited purpose public figure consistent with this

Court’s precedent, judgment in Astra’s favor was

supported in any event under two (2) adequate and

independent state grounds under Massachusetts law.

As the SJC stated, Astra is incorporated in New

York.* During the relevant period of this litigation,

* In his petition, Bildman casts himself as a whistleblower

and asserts that the “nexus of the conflict” between Astra and

himself was his “disapproval of [Astra AB’s] actions in disregard

of F.D.A. rules,” including asserting that Astra AB concealed

from the F.D.A. “severe fetus defects in a pregnant monkey on a

drug Petitioner was preparing.” (Pet. Br. at 5-6). Such an alle-

gation finds no support in the record. Indeed, any assertion that

Bildman was terminated for any reason other than his own mis-

conduct was expressly rejected by the jury in its answers to spe-

cial verdict questions. See R5658-5664. Moreover, Bildman’s

unsubstantiated assertions are not related in any way to the

four (4) alleged libels that are the subject of the SJC’s decision

or his petition before this Court.

* Astra, 455 Mass. at 119. Bildman never contended that

Astra USA is a foreign corporation, which it is not. Thus, the

entire premise of one of Bildman’s two grounds for seeking

review by this Court; namely, that the First Amendment does

not protect “a foreign multi-national drug company” is misplaced.

See Pet. Br. at p.i—Questions Presented And Reasons For

Granting The Petition; pp. 21, 23 (“lhe protection of and sup-

port of foreign non-media companies’ intervention in the US.

legal system circumventing the U.S. rule to try cases inside the

courts is bound to severely damage the U‘S. trial process”); and

pp. 24-25 (“the lower court’s vesting in a non-media foreign

Astra’s principal place of business was Westborough,

Massachusetts.

BusinessWeek Investigates Allegations That

Bildman Had Sexually Harassed

Astra Employees

In December 1995, Bildman learned that a Business-

Week reporter named Mark Maremont was conduc-

ting an investigation into allegations by current and

former Astra employees that he and senior manage-

ment at Astra had engaged in sexual harassment.

Indeed, over the prior decade Bildman had received

numerous complaints from Astra employees about his

own conduct and that of his direct reports. Bildman

had in fact authorized the payment of several

hundred thousand dollars of Astra funds to settle

demands or claims made by female employees who

asserted that he had coerced them into unwanted

sexual relations, made sexually inappropriate com-

ments, kissed or attempted to kiss them, touched

their necks and buttocks, and danced with them in a

sexually provocative way. Each of the settlement

agreements obtained at Bildman’s direction con-

tained confidentiality provisions. Bildman did not

disclose to Astra’s Board of Directors that Astra,

under his management, had a sexual harassment

problem. Astra, 455 Mass. at 120-122.

Bildman Assembles A Media “Task Force”

In December 1995

Upon learning that BusinessWeek was conducting

an investigation into sexual harassment by him and

his senior managers, and knowing of his own conduct,

corporate defamation defendant...such protection and support of

foreign influence cannot be read into the language of the First

Amendment...”) (emphasis supplied).

and, inter alia, of the settlements he had authorized

to resolve claims and demands centered on his own

conduct, Bildman in December 1995 created what he

termed a “task force” consisting of public relations

consultants and attorneys in order “to determine

BusinessWeek’s sources of information and to control

the flow of information to BusinessWeek and Astra

AB.” Id. at 121; R576.

In January 1996, shortly after learning of the

BusinessWeek investigation, Bildman authorized a

new payment of $100,000 in Astra’s funds to another

female employee to settle her sexual harassment

claims against him. Astra, 455 Mass. at 121.

In April 1996, Bildman Directs His Task

Force To Meet With BusinessWeek To

Influence The Emerging Story

On April 16, 1996, BusinessWeek wrote a letter to

Astra asking to speak with Bildman about “serious

allegations of sexual harassment” at Astra, including

by Bildman. - Bildman directed Astra’s General

Counsel to send a letter to BusinessWeek denying the

allegations and offering to meet with BusinessWeek if

it provided more details to Astra. BusinessWeek

thereafter provided a seven-page letter to Astra AB

on April 18, 1996 further detailing the allegations of

sexual harassment against Bildman. /d. at 121-122.

Once Bildman knew that BusinessWeek had provided

Astra’s parent with detailed allegations against him,

he “decided, at Maremont’s request, to arrange a

meeting with Maremont and BusinessWeek magazine

at Astra USA headquarters [on April 22, 1996] ... to

rebut the allegations contained in the April 18, 1996

letter.” R580; Astra, 455 Mass. at 122-123. Bildman’s

task force informed him that, as a result of its

meeting with Maremont, BusinessWeek would not

immediately publish the story. R581-582.

Bildman also attempted to influence the brewing

controversy internally at Astra. “[F)Jrom December,

1995 through March, 1996, Bildman apparently also

[had] orchestrated a campaign to direct female and

minority Astra employees to write letters of support

for him to Astra AB.” Astra, 455 Mass. at 122, n.11.

Bildman assured Astra AB that Astra had nothing

“to be ashamed of” and had a “good record concerning

sexual harassment.” Jd. at 122.

Astra Suspends Bildman And

Begins Its Own Investigation

Upon receiving BusinessWeek’s detailed letter,

Astra AB sent Johansson, Astra AB’s General Counsel,

Goran Lerenius, and Thomas Clauss, Jr., a partner

in the law firm of Winthrop, Stimson, Putnam &

Roberts (“Winthrop Stimson”) to Astra’s headquarters

to conduct an initial investigation. On April 28,

2006, Astra’s Board of Directors, after having inter-

viewed Astra employees, including Bildman, about

the BusinessWeek allegations, voted unanimously to

suspend Bildman with pay, to create a special com-

mittee to investigate allegations of sexual harassment

and other improprieties and report its findings to the

Board, and to retain Winthrop Stimson to conduct a

full investigation. Jd. at 123.

After Bildman’s Suspension, Numerous Media

Articles Are Published Concerning Bildman’s

Suspension And The Numerous Public Lawsuits

That Had Been Filed Alleging

Sexual Harassment By Bildman

On April 30, 1996, the Boston Globe published an

article about Bildman’s suspension. Boston Globe,

“Astra Chief Suspended After Harassment Charge:

Westborough Firm to Probe Employee Allegations”,

1996 WLNR 2200474 (April 30, 1995). It reported

that Bildman’s suspension came “on the heels of

recent allegations of sexual harassment at Mitsu-

bishi” to the effect that up to 500 female Mitsubishi

workers were subjected to “groping, demands for

sex and sexually explicit drawings.” Jd. The Boston

Herald and Worcester Telegram & Gazette also pub-

lished stories on the sexual harassment allegations

against Bildman on April 30, 1996. See 1996 WLNR

252282 and 1996 WLNR 5869843.

The next day, May 1, 1996, the Boston Globe

published an article entitled “Suit Alleges a Wild-

Party Tone At Astra” about a new lawsuit filed by a

former Astra employee against the company. R875-877.

It reported that this lawsuit was the sixteenth sexual

discrimination and/or harassment action brought

against Astra or its executives by present or former

employees, and quoted a Commissioner of the Massa-

chusetts Commission Against Discrimination as stating

that this was an “unusually large number.” /d.

Before The BusinessWeek Publication, Bildman

Actively Communicates With The Media

To Influence The Public Controversy

As of May 1, 1996, the BusinessWeek story had not

yet been published. On May Ist, the same day as the

front page Boston Globe story on the most recent

lawsuit against Astra, Bildman once again took

affirmative steps to influence the BusinessWeek story

before its publication. His personal counsel sent two

letters to the BusinessWeek reporter, Mark Maremont.

The first referred to a conversation between Bildman’s

counsel and Maremont earlier that day, in which

Bildman’s counsel requested the opportunity to address

the allegations prior to the story’s publication. R707-

08. The second letter contained a “Statement of Lars

Bildman” responding to the allegations contained in

Maremont’s letter. See R712-713.

The Publication Of “Abuse Of Power”

Generates Media Stories To Which Bildman

Responds, As Well As An EEOC Investigation

The next day, May 2, 1996, BusinessWeek published

a cover story entitled “Abuse of Power: The Aston-

ishing Tale of Sexual Harassment at Astra USA.”

BusinessWeek reported that it had interviewed more

than 70 former and current employees and found “a

disturbing pattern of complaints during much of

Bildman’s 15-year tenure, including a dozen cases of

women who claimed they were either fondled or

solicited for sexual favors by Bildman or other Astra

executives.” Astra, 455 Mass. at 125.

that the issue in which the article appeared was published on

May 2, 1996. R911 at 16; Zortman v. Bildman, 1999 WL 1318959,

*4 (Jan. 15, 1999) (Hinkle, J.) (“On May 2, 1996, Business Week

published as its cover story an article by Maremont entitled

“Abuse of Power”).

The undisputed record on summary judgment was

that the cover story generated both local and interna-

tional media coverage, and that during May and

June, 1996 alone, over one hundred and fifty articles

concerning Bildman and Astra were published

throughout the world. Jd. at 124; R1027.

In his petition, Bildman asserts that Astra “approved

the publication of the BusinessWeek article after the

magazine’s editorial board had turned it down.”

Bildman then contends that the “court below left this

fact unnoticed.” (Pet. Br. at 6 and n.3). There is no

evidentiary support for this assertion.®

After the BusinessWeek article was published on

May 2, 1996, Bildman continued to actively contact

and interact with the media. As the SJC found:

The judge found that Bildman, through counsel,

repeatedly contacted and used the media,

including BusinessWeek, the Boston Globe, and

the Boston Herald, to comment on the investiga-

tion, deny and rebut Astra’s allegations, and

influence the resolution of the investigation in

the public eye. In addition, Bildman sent press

releases to various media outlets, including the

New York Times, Wall Street Journal, Reuters,

United Press, New England Cable News, CBS

News, WCVB-TV, WLVI-TV, and WHDH-TV in

Boston. Bildman also entered into unsuccessful

for this assertion is merely his Amended Counterclaim and

Third-Party Complaint. However, even that document fails to

allege that Astra in any way “approved the publication” of the

BusinessWeek article, which was, of course, highly critical of

Astra. See R581-582.

negotiations with CBS News to be interviewed on

its evening news program in New York and

appeared in an interview on a Swedish television

program.

Astra, 455 Mass. at 145, n.44; R1026-1030.

Media reports on the controversy also contained

Bildman’s counsel’s extensive comments on it. On

May 20, 1996, BusinessWeek published a follow-up

article entitled “Aftershocks Are Rumbling Through

Astra: An EEOC Sexual Harassment Probe Could Be

In The Works.” That article quoted Bildman’s counsel

as stating that “there is nothing independent about

the investigation and the results have been predeter-

mined.” R725. Commenting on a lawsuit filed by

former Astra employees asserting that Bildman had

“covered-up” allegations of sexual abuse, Bildman’s

counsel was quoted in a Boston Herald article,

entitled “Six Former Astra Workers File Sex Suit”

and published on May 31, 1996, as saying “This is the

most reprehensible piece of drivel I’ve ever seen in 17

years of practicing law.... I can’t believe an attorney

licensed to practice law in the Commonwealth would

even file it.” R727.

In a June 3, 1996 letter to the Producer of CBS

Evening News, Bildman’s counsel wrote: “I am looking

forward to hearing from you further with respect to

my request that I be given the opportunity to respond

on camera to the allegations which have been made

against my client.” R745. In a press release dated

June 4, 1996 issued through his counsel, Bildman

stated: “Since the beginning of this case, I and my

family have been outraged at the irresponsible alle-

gations that have been made against me.” R783. In

a June 13, 1996 letter to CBS News, Bildman’s counsel

wrote on Bildman’s behalf: “He has authorized me to

speak for him and I am requesting the opportunity to

go on-camera to respond to the allegations set forth

in your letter of June 12th.” R797.

The Equal Employment Opportunity Commission

(“EEOC”) also initiated an investigation in May 1996

into the allegations of sexual harassment at Astra.

R721-722, 724. In February 1998, the EEOC filed its

formal complaint against Astra alleging a pattern

and practice of sexual harassment of Astra employees

since “at least January 1, 1993 and continuing.”

Astra, 455 Mass. at 124-125. Astra entered into a

consent decree with the EEOC, which established a

$9,850,000 fund to compensate victims of sexual

harassment at the company. /d.

Astra’s Internal Investigation Reveals

Extensive Misconduct By Bildman Leading

To His Termination For Cause

Winthrop Stimson’s two-month investigation

uncovered “evidence of pervasive sexual harassment

of female Astra employees by Bildman and others in

management,” evidence that Bildman had threatened

employees who spoke to investigators, destroyed and/or

ordered the destruction of company documents, and

“evidence of...serious financial and other improprie-

ties.”’ Astra, 455 Mass. at 123-124, n.13. On June 25,

1996, Astra’s Board of Directors voted to terminate

Bildman’s employment for cause. Id.

7 In March 1997, Bildman was indicted for various felonies

relating to the conduct in question and, in January 1998, he

pleaded guilty to three counts of willfully filing false federal tax

returns. Jd. at 125, n.15. Both Bildman’s indictment and his

subsequent guilty plea received considerable media attention.

See R899-909.

Astra Commences The Underlying Lawsuit

Against Bildman, And Bildman Counterclaims,

Inter Alia, For “Negligent Libel”

In February 1998, Astra commenced the under-

lying lawsuit against Bildman for fraud, conversion,

waste and breaches of his fiduciary duties. Bildman

responded by suing Astra and two of its Board

members, Mogren and Johansson, inter alia, for tor-

tious interference with his employment agreement

and for libel. Prior to trial, the judge granted Astra’s

summary judgment motion on all of Bildman’s libel

claims, applying this Court’s analysis in Gertz uv.

Robert Welch, Inc., 418 U.S. 323 (1974) to find that

Bildman was a limited purpose public figure and

that, quite apart from whether the statements in

question were true, Bildman had not adduced the

requisite evidence of actual malice to survive summary

judgment.®

After a seven week trial, a jury found Bildman

liable to Astra for fraud, conversion, waste and

breach of fiduciary duty by “making affirmative

misrepresentation or failing to disclose to Astra

material information which he had a duty to

disclose,” and for “improper use of Astra funds.” The

jury also found that Bildman engaged in sexual

harassment of Astra employees, that he retaliated

against Astra employees who had exercised their

rights to make complaints under Astra’s sexual

harassment policy and that he had violated Astra’s

sexual harassment policy. Astra, 455 Mass. at 126.

® At summary judgment, the trial court found that close to ten

purportedly defamatory statements were either true or non-

defamatory as a matter of law. Bildman did not appeal these

findings or the trial court’s dismissal of his “malicious libel” or

“libel per se” claims. Astra, 455 Mass. at 144, n.42.

The jury found that in terminating its employment

agreement with Bildman for cause Astra had not

breached that agreement, and that Mogren and

Johansson had not interfered with Bildman’s

employment agreement. In answering a_ special

question about the reasonableness of Astra’s conduct,

the jury found that “[alt the time Astra terminated

Mr. Bildman, [ ] Astra [had] a reasonable good faith

basis for believing Mr. Bildman had engaged in

conduct justifying his termination ‘for cause’ under

the 1993 employment contract.” R5662.

The jury found that Bildman was liable to Astra for

fraud, conversion, corporate waste, and breaches of

his fiduciary duties. Astra, 455 Mass. at 117-118.

The trial court reserved Astra’s claim for forfeiture

of the compensation paid to Bildman during the

period of his disloyalty, ultimately ordered a bench

trial on that issue, and found that notwithstanding

the strict forfeiture law under the law of New York

where Astra was incorporated, Astra was not entitled

to forfeiture.

The parties each appealed certain issues to the

Massachusetts Appeals Court; the SJC, sua sponte,

took the matter for direct review.

The SJC Affirms The Trial Court’s Grant Of

Summary Judgment On Bildman’s

Negligent Libel Claim

In his appeal, Bildman did not challenge the jury

verdict against him. Rather, he confined his appeal

to the trial certs denial of his bid for legal fees

under the em»*»vment agreement and its grant of

summary jJudgi **+ on his libel claims. His appeal of

the summary judgment was limited to the trial

court’s determination that he was a limited purpose

public figure; he did not challenge the trial court’s

determination that he had failed to adduce the

requisite evidence of actual malice.

The SJC held that Astra was entitled to forfeiture

of Bildman’s compensation during the period of his

disloyalty, and upheld the trial court’s grant of sum-

mary judgment for Astra on Bildman’s defamation

claims, applying the rule set forth in Gertz and

holding that, under the circumstances of this case

and based on the undisputed record, Bildman did

indeed qualify as a limited purpose public figure.

ARGUMENT

I. THIS CASE DOES NOT MERIT REVIEW

BECAUSE THE SJC PROPERLY STATED

AND APPLIED THIS COURT’S PRECE-

DENT IN HOLDING THAT BILDMAN WAS

A LIMITED PURPOSE PUBLIC FIGURE.

In his Petition, Bildman concedes that the SJC

properly stated the legal standard under Gertz in

determining when an individual becomes a limited

purpose public figure, but contends that it then

“ignored all instructions in Gertz and its progeny as

to the existence of a public controversy and the

characteristics of a limited purpose public figure.”

(Pet. Br. at p.9). Bildman’s challenge to the applica-

tion of a properly-stated rule of law to the record is

precisely the type of petition that this Court’s Rules

indicate rarely justifies review. See S. Ct. R. 10.

Not only did the SJC properly state the applicable

legal standard for determining whether an individual

is a limited purpose public figure, the SJC’s decision

is entirely faithful to and consistent with the

Gertz holding that extended public figure status to

those who “have brought themselves to the forefront

of particular controversies in order to influence the

resolution of the issues involved” and who, therefore,

have “invite[d] attention and comment.” Gertz, 418

U.S. at 345. The SJC properly applied that standard

to hold that Bildman was a limited purpose public

figure as of the time of the four (4) purportedly

actionable statements that were made by Astra on

May 3, 1996, May 13, 1996, June 26, 1996 and

February 5, 1998. See Astra, 455 Mass. at 143, n.42

(“The judge determined as to most of {the alleged

defamatory statements] that they were either true or

nondefamatory as a matter of law”).°

As the statement of the case demonstrates, by May

3, 1996, the earliest of those dates, Bildman had

° As discussed infra, these four statements were: (1) a May 3,

1996, article in the Wall Street Journal in which an Astra spo-

kesperson described Bildman as “not forthcoming” to Astra AB

about the BusinessWeek investigation; (2) a speech Mogren gave

to Astra employees on May 13, 1996, in which he stated:

“[Slome people have tried to put themselves above the rules, at

the same time that they have made great efforts to cover up

what has happened’; (3) a June 26, 1996 Astra news release and

press release that made identical statements that Bildman “had

engaged in inappropriate behavior at company functions, that

he had disregarded company rules and procedures, that he had

failed to keep the company apprised, that he had rented outside

office space for the purpose of keeping information from the

parent company, that he had used company funds for family

vacations and that he had used approximately $2 million for

personal expenses”; and (4) an Astra statement appearing in the

February 5, 1998 Boston Globe, after Astra’s settlement with

the EEOC, that Bildman’s “actions-asking people to destroy

records and the like-are in our estimation an attempt to cover

up and keep things from his superiors in the company.” Astra,

455 Mass. at 143, n.42.

already engaged in extensive communications with

the media in an effort to influence how they portrayed

him in the emerging controversy that centered on his

conduct as CEO. Indeed, five (5) months earlier,

Bildman had assembled a public relations team for

the purpose of influencing the publication of the

emerging BusinessWeek story prior to its publication.

Then, in April 1996, Bildman had orchestrated a

meeting of his “task force” with the BusinessWeek

reporter in order to influence the story shortly before

its publication.

In addition, on May Ist, after he was suspended

but the day before the BusinessWeek story was

published, Bildman had his counsel speak with the

BusinessWeek reporter to see if he could affect its

content, and then faxed the reporter a “Statement of

Lars Bildman.” On that day, Bildman was already

the subject of Boston Globe and Boston Herald stories

relating to sexual harassment allegations against

him by former Astra employees. By the next day,

May 2, 1996, Bildman was also the subject of a

BusinessWeek cover story, which, in turn, generated

some one hundred and fifty additional stories about

Bildman and Astra around the world. There is no

evidence in the record that Astra was responsible for

these stories.

Bildman’s sexual harassment of employees at

Astra was indeed a public controversy. As an initial

matter and as reflected in the BusinessWeek article

itself, the revelation of Bildman’s conduct at Astra

came several months after the revelation of another

high-profile corporate sexual harassment scandal,

which had generated a governmental investigation by

the EEOC:

The Astra example comes on the heels of the

sexual harassment scandal at the Norman (IIl.)

factory of Mitsubishi.... The [EEOC], which

brought its largest suit of this kind against the

company, alleges that Mitsubishi did not respond

to the repeated complaints.... While Mitsubishi

and Astra are extraordinary for the breadth and

depth of their problems, many companies are

struggling with sexual harassment claims.

R919.

As recognized by the SJC, “the issue of sexual

harassment in the workplace is a focus of a consider-

able body of State and Federal law and regulation

and a matter of frequent and often heated public

debate.” Astra, 455 Mass. at 145-146. Such was

certainly the case when it came to Bildman’s miscon-

duct at Astra:

The topic of Bildman’s actions echoed far beyond

Astra, its employees, and their families. For

many months, it wove its way into the national

and international discourse about permissible

conduct in the workplace and the place and

treatment of women in the private sector.

Id.

Not only was sexual harassment at Astra a public

controversy by May 1996, but it was Bildman’s conduct

which was the controversy, as the trial court properly

found based on the undisputed summary judgment

record. R1233-1235—Summary Judgment Decision at

45-47 (“Bildman was at the center of a federal sexual

harassment investigation of a publicly traded phar-

maceutical company employing over 1,000 people in

Westborough, Massachusetts”). See Gray v. St. Martin’s

Press, Inc., 221 F.3d 243, 251 (1st Cir. 2000) (holding

that plaintiff was “central figure” in the public

controversy concerning the influence of lobbyists and

had been the subject of articles by Time Magazine

and Newsweek).

Bildman was not only the central figure in the

public controversy concerning Ais sexual harassment

of employees at Astra, he voluntarily and affirmatively

sought first to influence the BusinessWeek story

before it was published, and then to influence the

public’s view of the public controversy centering on

his conduct that was generated by the BusinessWeek

story and the immediate print and electronic media

stories about lawsuits and other allegations of his

misconduct. Based on Bildman’s press releases and

public statements, and his counsel’s repeated com-

munications with news outlets denouncing those who

had made these allegations, the trial court found “on

the undisputed record, that Bildman was neither a

victim nor an unwitting participant in the broad

media coverage of his dispute with Astra.” Astra, 455

Mass. at 145.

The SJC agreed:

His is not a case in which the libel plaintiff is a

“bit player” in a media drama created by forces

over which he had no control. Bildman played a

central role, with “access to the channels of effec-

tive communication” that most private individuals

do not enjoy.... Jt is readily apparent to us, as

it was to the judge, that Bildman “palpably

engineered efforts to project himself into the pub-

lic limelight.”

Astra, 455 Mass. at 145-146 (quoting Gertz, 418 U.S.

at 344 and Tripoli v. Boston Herald-Traveler Corp.,

359 Mass. 150, 156 (1971) (emphasis added)).

Bildman’s assertion that the SJC’s decision is at

odds with this Court’s precedent since Gertz is

incorrect. He relies on three cases in support of his

argument, each sharply different from the record in

this case.

In Time, Inc. v. Firestone, 424 U.S. 448 (1976), the

defamation plaintiff was a private litigant whose

divorce proceeding was covered by the media by

virtue of her social status and the evidence of

adultery by the parties. Indeed, there was no “public

controversy.” As this Court recognized, “|dJissolution

of a marriage through judicial proceedings is not the

sort of ‘public controversy’ referred to in Geriz, even

though the marital difficulties of extremely wealthy

individuals may be of interest to some portion of the

reading public.” Jd. at 545. Nor was there the requisite

evidence that the plaintiff had thrust herself to the

forefront of any controversy beyond the litigation

between herself and her husband. I/d. (wife did not

“choose to publicize issues on the propriety of her

married life. She was compelled to go to court...to

obtain legal release from the bonds of matrimony”).

As a result, the plaintiff was a private figure for

purposes of her libel claims.

Similarly, in Wolston v. Readers Digest Association,

443 U.S. 157 (1979), the defamation plaintiff had failed

to respond to a grand jury subpoena in connection

with the government’s investigation into Soviet

espionage in 1958. Then, close to twenty years later,

the defendants published a book contending that the

plaintiff was a Soviet agent in the United States and

had been indicted for espionage. In reversing the

lower court’s ruling that plaintiff was a limited

purpose public figure in 1958, the Court recognized

that the plaintiff had “not in any way [sought] to

arouse public sentiment in his favor and against the

lgovernment] investigation.” Jd. at 168.

Although the plaintiffs failure to respond to the

grand jury subpoena caused significant media

attention in 1958, the Court focused on the plaintiffs

role in the public controversy and his interaction with

the media.

We emphasize that a court must focus on the

“nature and extent of an individual’s participa-

tion in the particular controversy giving rise to

the defamation.”... Similarly, petitioner never

discussed this matter with the press, and limited

his involvement to that necessary to defend him-

self against the contempt charge. It is clear that

petitioner played only a minor role in whatever

controversy there may have been concerning the

investigation of Soviet espionage.

Id. at 167 (emphasis added) (quoting Gertz, 418 U.S.

at 352)). Because the plaintiff was the passive

recipient of media attention, and did nothing to seek

to shape or influence it, and his conduct was limited

to his failure to appear in response to a grand jury

subpoena, this Court held that he was not a limited

purpose public figure.

In the third case relied upon by Bildman, Hutch-

inson v. Proxmire, 443 U.S. 111 (1979), the defen-

dant’s argument that the plaintiff qualified for

limited purpose figure status rested principally on

the fact that plaintiff, a scientist, had: (1) successfully

applied for and received federal grants and (2) re-

sponded publicly to the defendant United States

Senators public announcement of the “Golden

Fleece” award that chastised federal agencies for

funding the plaintiffs research. This Court rejected

the defendant’s argument because it found that the

plaintiffs research only became a matter of public

controversy because of the defendant’s conduct and

plaintiff did not “thrust himself or his views into the

public controversy to influence others.” Id. at 112-

113 (“Those charged with defamation cannot, by their

own conduct, create their own defense by making the

claimant a public figure”).

Bildman’s role in the public controversy and his

attempt to influence it stands in stark contrast to the

passive behavior of the defamation plaintiffs in

Firestone, Wolston, and Proxmire. First, as the SJC

stated, Bildman was not a “bit player” in the public

controversy concerning the allegations of sexual

harassment at Astra in 1996. Rather, he was

the public controversy, playing a “central role” in

creating, trying to suppress, and then attempting to

influence the coverage of a sexual harassment

scandal whose wide-ranging impact is best reflected

by the international attention that it generated.

Astra, 455 Mass. at 145-146 and n.45 (“We add that

the media storm that swept over Bildman originated

in his own wrongful conduct as a corporate officer

and director beginning years before BusinessWeek

began its investigation”) (emphasis added).

Second, unlike the plaintiffs in Firestone and

Wolston, Bildman actively sought out the media,

directly and through his counsel, before Astra pub-

lished any of the four statements that he asserts

were actionable, in an effort to shape the media’s

reporting of his alleged sexual harassment of female

employees. Indeed, Bildman had: (1) established a

public relations task force in December 1995 in an

effort to thwart, or shape, the BusinessWeek inves-

tigation; (2) directed his task force to meet with

BusinessWeek in April 1996 in an effort to persuade

the magazine not to publish its exposé; (3) after his

suspension, but before the BusinessWeek article’s

publication, directed his counsel to communicate, on

his behalf, with BusinessWeek and to provide the

“Statement of Lars Bildman”; and (4) after the

BusinessWeek article’s publication on May 2, 1996,

continued to actively and repeatedly communicate

with the numerous media outlets. See Astra, 455

Mass. at 146 (“It is readily apparent to us, as it was

to the judge, that Bildman ‘palpably engineered

efforts to project himself into the public limelight’).

Third, unlike in Firestone and Proxmire, in which

the defendants dragged the plaintiffs into the media

spotlight, Astra had nothing to do with Business-

Week’s publication of “Abuse of Power” or of the

subsequent news stories published in the Boston

Globe and other newspapers in the spring and

summer of 1996 concerning the various sexual harass-

ment lawsuits that had been filed against Bildman.

Put simply, by the time Astra made the four

statements which are the subject of this petition,

Bildman had not only generated a public controversy

concerning his own conduct, but had actively ensured

that he stayed at the forefront of that controversy by

attempting to use the media to influence the public’s

perception of him and his role in the controversy. See

Astra, 455 Mass. at 145-146 (“Bildman played a

central role, with ‘access to the channels of effective

communication’ that most private individuals do not

enjoy”) (quoting Gertz, 418 U.S. at 344). The SJC

properly held that Bildman was a limited purpose

public figure for purposes of his negligent libel claims

against Astra.

Il. THIS CASE DOES NOT MERIT REVIEW

BECAUSE BILDMAN’S CONTENTION

THAT THE FIRST AMENDMENT DOES

NOT PROTECT ASTRA (1) HAS BEEN

WAIVED AND (2) IS ERRONEOUS.

In his petition, Bildman asserts for the first time in

over twelve years of litigation that “the First

Amendment does not invest in foreign multinational

corporations the same immunities as it guarantees a

media defendant against liability in defamation

actions.” (Pet. Br. at 21-22).

As a threshold matter, it is worth noting that the

trial court dismissed Bildman’s claims against Astra

AB (a foreign multinational corporation) well before

summary judgment and Bildman withdrew his appeal

of all rulings in favor of Astra AB. Moreover, Bildman’s

libel claims at the summary judgment stage were

against Astra USA, Inc., which is a New York

corporation. As a result, Bildman had no libel claims

against a “foreign multinational drug company” in

the trial court, and his appeal before the SJC

similarly did not involve Astra AB.

In any event, Bildman never asserted that Astra

was unprotected by the First Amendment either

before the trial court or the SJC. As a result,

Bildman has waived this issue. See Plucket v. United

States,—U.S.—, 129 S.Ct. 1423, 1428 (2009) (“No pro-

cedural principle is more familiar to this Court than

a right may be forfeited in criminal as well as civil

cases by the failure to make timely assertion of the

right before a tnbunal having jurisdiction to determine

it”); Lazzara v. Wyle Electronics Co., 56 Mass. App.

Ct. 1112, 2002 WL 3169483, at *4 and n.13 (Mass.

App. Ct. 2002) (“We do not consider arguments or

issues not advanced below in opposition to summary

judgment, but raised for the first time on appeal”).

Moreover, this Court ruled less than two months

ago that the “Government may not suppress political

speech on the basis of the speaker’s corporate identity.”

Citizens United v. Federal Election Commission,—

U.S.—, 130 S.Ct. 876, 913 (2010). The Court made it

clear that it has long recognized that “First Amend-

ment protection extends to corporations.” Jd. at 889-

900 (citing approximately twenty cases).

We thus find no support in the First Amendment,

or in the decisions of this Court, for the

proposition that speech that otherwise would be

within the protection of the First Amendment

loses that protection simply because its source is

a corporation....

Id. at 902 (quoting First Nat. Bank of Boston v.

Bellotti, 435 U.S. 765, 784-785 (1978)).

Further, Bildman’s attempt to draw a Constitutional

distinction between corporations and “media defen-

dants” in terms of the scope and protection afforded

by the First Amendment has similarly been rejected

by this Court.

There is no precedent supporting laws that

attempt to distinguish between corporations

which are deemed to be exempt as media

corporations and those which are not. We have

consistently rejected the proposition that the

institutional press has any constitutional privilege

beyond that of other speakers.

Id. at 905. Bildman fails to offer any contrary legal

authority. Bildman’s argument does not merit

review by this Court.

Ill. THIS CASE DOES NOT MERIT REVIEW

BECAUSE THERE ARE TWO ADEQUATE

AND INDEPENDENT STATE GROUNDS

UNDER MASSACHUSETTS LAW FOR

THE SJC’S REJECTION OF BILDMAN’S

NEGLIGENT LIBEL CLAIMS.

This Court has tended to deny petitions seeking

review of state court decisions where adequate

and independent state grounds exist supporting

those decisions. E. Gressman, K. Geller, S. Shapiro,

T. Bishop, E. Hartnett, Supreme Court Practice at

4.25 (9th ed. 2007); Justice Brennan, State Court

Decisions and the Supreme Court, 31 Penn. Bar.

Assn. Q. 393, 399-400 (1960) (where substantial ques-

tions are presented and were properly raised in state

court, “even then we may not take the case if the

state court’s judgment can be sustained on an

independent ground of state law”).

While this Court presumptively has jurisdiction to

review the SJC’s decision under the standard articu-

lated in Michigan v. Long, 463 U.S. 1032 (1983), it

should decline the petition for certiorari since adequate

and independent state grounds exist that support the

SJC’s decision on Petitioner’s libel claims." As this

Court explained over sixty-five years ago:

[O]ur power is to correct wrong judgments, not to

revise opinions. We are not permitted to render

an advisory opinion, and if the same judgment

1° In Long, the Court held that it will presume that it has

jurisdiction to review a state court decision when the decision

“fairly appears to rest primarily on federal law, or to be inter-

woven with federal law, and when the adequacy and indepen-

dence of any possible state law ground is not clear from the face

of the opinion.” Long, 463 U.S. at 1040-1041.

would be rendered by the state court after we

corrected its views of federal laws, our review

could amount to nothing more than an advisory

opinion.

Herb v. Pitcairn, 324 U.S. 117, 125-126 (1945). As

Justice Stevens recently stated: “[e]ven if the state

court opinion does not include the magic words set

forth in Long, or some similarly explicit sentence, we

lack jurisdiction if it is nonetheless apparent that the

decision is indeed supported by an adequate and

independent state ground.” Florida v. Powell,—U.S.—,

130 S.Ct. 1195 (2010) (Stevens, J. dissenting).”

Iiere, and as Astra argued to the SJC, the jury’s

verdict, as reflected by its answers to special questions,

supported the SJC’s decision upholding dismissal of

Bildman’s negligent libel claims on two state law

grounds entirely independent of whether Bildman

qualified as a limited purpose public figure based on

this Court’s precedent and the record.”

’ Indeed, even where the Court accepts a petition for review

of a state court decision, its “practice is to avoid reaching consti-

tutional questions if a dispositive non-constitutional ground is

available.” Proxmire, 443 U.S. at 122; Wolston, 443 U.S. at 160,

n.2 (“(Tjhe general principle [is] that dispositive issues of statutory

and local law are to be treated before reaching constitutional

issues”).

12 See Astra’s Reply Brief at pp. 10-13. The SJC had no need

to reach these arguments, however, since it upheld the trial

court’s ruling that Bildman was a limited purpose public figure

for purposes of the allegedly defamatory statements. Where

Bildman did not appeal from the trial court’s ruling that he had

not adduced the requisite evidence of actual malice to survive

summary judgment under the New York Times standard, the

Court’s ruling that Bildman was indeed a limited purpose public

figure alone dictated that the trial court’s decision granting

First, where the jury expressly found that Astra

(1) had not breached the employment agreement in

terminating Bildman for cause and (2) had undertaken

its investigation reasonably and in good faith such

that Astra had “a reasonable good faith basis for

believing that Mr. Bildman had engaged in wrongful

conduct justifying his termination ‘for cause’ under

the 1993 employment contract,” Astra had an

independent conditional privilege under Massachusetts

law to comment about its investigation of its CEO

and his conduct because it was reasonably necessary

to do so in order to protect its legitimate interests.

See Bratt v. International Business Machines Corp.,

392 Mass. 508, 512-513 (1984) (“a person may possess

a conditional privilege to publish defamatory material

if the publication is reasonably necessary to the

protection or furtherance of a legitimate business

interest”).

Under Massachusetts law, this conditional privilege

imposed the same burden on Bildman to adduce trial-

worthy evidence of actual malice as he was required

to adduce as a limited purpose public figure. Jd. at

515-516. Accordingly, judgment was warranted for

Astra on the entirely independent state-law basis of

its conditional privilege, coupled with Bildman’s

inability to adduce evidence of actual malice on

Astra’s part.

Second, the specific jury findings that Bildman

defrauded Astra, converted and wasted its assets,

falsely misrepresented facts to it and/or withheld

material facts from it, breached his fiduciary duties

to it by misappropriating its funds, sexually harassed

summary judgment to Astra on Bildman’s negligent libel claims

be upheld.

Astra employees, retaliated against Astra employees

and violated Astra’s sexual harassment policy

established that the allegedly defamatory statements

that underlie this appeal were “substantially true,”

at the very minimum. Therefore, whether or not

Bildman qualified as a limited purpose public figure

on the basis of the applicable precedent and the

record, the jury verdict has effectively established

that Astra’s statements were true and could not

support a defamation claim even if this Court were to

disagree with the conclusion that Bildman were a li-

mited purpose public figure on the record in this case.

A. The Jury’s Answers To Special Questions

Established Astra’s Conditional Privilege

To Comment On Its Investigation Into Its

Former CEO’s Misconduct, And Imposed

An Independent Burden On Bildman

To Adduce The Requisite Evidence Of

Actual Malice.

Under Massachusetts law, an employer has a

conditional privilege to comment on its reasons for

terminating an employee as long as its communica-

tions are made principally for the purpose of

furthering its legitimate interests. The conditional

privilege protects an employer from liability unless

the employee can establish that it acted with actual

malice or acted recklessly by unnecessary, unrea-

sonable or excessive publication of the allegedly

defamatory material. See, e.g., Bratt, 392 Mass. at

512-516; Broomes v. Blue Cross Blue Shield of

Massachusetts, Inc., 74 Mass. App. Ct. 1123, 2009 WL

1953006, *9 (Mass. App. Ct. July 9, 2009) (affirming

summary judgment on defamation claims; “the

employee bears the burden of demonstrating that the

employer has lost the privilege”); Kyle v. Mongan,

72 Mass. App. Ct. 1111, 2008 WL 2951800, *2-3

(Mass. App. Ct. August 4, 2008) (affirming summary

judgment dismissing defamation claim because the

defendant president of a hospital under public

scrutiny for terminating employee “had a conditional

privilege to publish defamatory material about Kyle

in order to protect MGHI’s legitimate business

interests”); Sklar v. Beth Israel Deaconess Medical

Center, 59 Mass. App. Ct. 550, 558 (2003) (affirming

grant of summary judgment because supervisor’s

publication of information about employee’s possible

ethical violations was conditionally privileged);

Dragonas v. School Committee of Melrose, 64 Mass.

App. Ct. 429, 438-439 (2005) (conditional privilege is

lost “only if publication is not made chiefly for the

purposes of furthering the [business] interest”).

Astra moved for summary judgment on Bildman’s

negligent libel claims not only on the basis of Bild-

man’s status as a limited purpose public figure, but

on the alternative ground that it was conditionally

privileged to comment on Bildman’s suspension and

termination in order to protect its legitimate business

interests in the context of the extraordinary public

controversy surrounding the allegations of sexual

harassment by Astra management and the highly-

publicized EEOC investigation into the company that

ensued. See R1242-1243. In opposing Astra’s motion

for summary judgment, Bildman did not assert that

Astra’s statements were published “excessively.”

Rather, he argued that Astra had published the state-

ments based on an improper motive and with ill will.

While the trial court agreed that Bildman was a

limited purpose public figure and granted summary

judgment on that basis, it found that, because

Bildman contended that Astra’s investigation was a

wrongful one, Astra’s entitlement to the conditional

privilege was a matter of dispute, and therefore not

one that could be determined as a matter of law.

R1244-1247.

However, the subsequent jury verdict in Astra’s

favor and in favor of the two Astra executives who

Bildman contended had tortiously interfered with his

employment agreement, and the jury’s answers to

the special questions posed to it, have conclusively

resolved that dispute in Astra’s favor. They establish

that Astra was indeed conditionally privileged to

comment on the discipline of its CEO. See R5658-

5664.

Specifically, the jury found that Astra’s inves-

tigation into Bildman’s conduct leading to his termi-

nation for cause produced substantial evidence that

he had misappropriated corporate funds for personal

purposes, engaged in inappropriate conduct toward

employees and been dishonest with Astra’s Board of

Directors. The jury expressly found that Bildman

had, indeed, defrauded Astra, wrongfully converted

and misappropriated its funds, engaged in sexual

harassment of Astra employees and _ retaliated

against them, and made false representations of fact

or failed to disclose material facts to Astra’s Board.

And, unsurprisingly given its findings that Bildman

had actually engaged, inter alia, in fraud, misappro-

priation of corporate funds, misleading conduct and

sexual] harassment, the jury also expressly found that

“laJt the time Astra terminated Mr. Bildman, Astra

[had] a reasonable good faith basis for believing Mr.

Bildman had engaged in conduct justifying his

termination ‘for cause” under his employment agree-

ment. See R5662 at Q.19 (emphasis added).

Similarly, the jury expressly found that Mogren

and Johansson had not tortiously interfered with

Bildman’s employment agreement, effectively consti-

tuting a finding that they did not act in bad faith or

out of an improper motive. See R5663; Brewster

Wallcovering Co. v. Blue Mountain Wallcoverings,

Inc., 68 Mass. App. Ct. 582, 608 (2007) (reversing

verdict on tortious interference claim; “the ‘improper

motive or means’ element requires proof of actual

malice, i.e. ‘a spiteful, malignant purpose, unrelated

to the legitimate corporate interest”).

In short, the jury verdict answered the very

dispositive question that the trial court found was

unanswerable at the summary judgment stage on the

applicability of the conditional privilege under

Massachusetts law: Astra’s actions were fair, in good

faith and not based on improper motive. Accordingly,

Astra was conditionally privileged to comment on its

investigation of and disciplinary actions against its

former CEO. Bildman did not and does not challenge

the trial court’s finding that, assuming that Astra

had stated anything about him that was actually

untrue, he had failed to adduce evidence at the

summary judgment stage that Astra had acted in

reckless disregard of the statement’s untruth.

B. The Jury Verdict And Its Answers To

Special Questions Also Established The

Substantial Truth Of Astra’s Purportedly

Actionable Statements.

The SJC’s judgment would be proper on yet

another independent state ground, even if Bildman

was not a limited purpose public figure, for the most

fundamental reason of all. Astra’s purportedly

actionable statements were true or substantially true,

as established by the jury’s verdict in Astra’s favor.

See Mason v. New Yorker Magazine, Inc., 501 U.S.

496, 516-517 (1991) (Law of libel “concentrates upon

substantial truth..... Minor inaccuracies do not

amount to falsity so long as the substance, the gift,

the sting, of the libelous charge be justified”); Reilly

v. Associated Press, 59 Mass. App. Ct. 764, 770-771

(2003) (Statements “were essentially true, albeit with

minor inaccuracies, and so were not defamatory”).

A comparison of the statements that formed the

basis of Bildman’s appeal first to the SJC and now to

this Court, on the one hand, with the jury’s express

findings, on the other, demonstrates that the jury has

adjudicated the truth or substantial truth of each of

these statements—all in Astra’s favor. The SJC

summarized Bildman’s negligent defamation claim as

follows:

On appeal, Bildman’s negligent libel claim

focuses on the following statements: (a) a May 3,

1996, article in the Wall Street Journal in which

an Astra spokesperson described Bildman as “not

forthcoming” to Astra AB about the Business-

Week investigation;

(b) a speech Mogren gave to Astra employees on

May 13, 1996, in which he stated, among other

things: “{[Slome people have tried to put

themselves above the rules, at the same time

that they have made great efforts to cover up

what has happened’;

release that made identical statements that, as

Bildman summarized on appeal, he “had engaged

in inappropriate behavior at company functions,

that he had disregarded company rules and pro-

cedures, that he had failed to keep the company

apprised, that he had rented outside office space

for the purpose of keeping information from the

parent company, that he had used company

funds for family vacations and that he had used

approximately $2 million for personal expenses”;

and

(d) an Astra statement appearing in the February

5, 1998, Boston Globe that Bildman’s “actions—

asking people to destroy records and the like—

are in our estimation an attempt to cover up and

keep things from his superiors in the company.”

Astra, 455 Mass. at 143, n.42.

The jury’s verdict that Bildman had defrauded

Astra, misappropriated its funds and made material

misrepresentations or withheld material facts from

its Board conclusively establishes the truth of

statements (a) and (b).

Its express findings that Bildman had sexually

harassed and retaliated against Astra employees,

had violated Astra’s sexual harassment policies, had

defrauded Astra out of $1,042,000 and had converted

that amount for personal use, confirmed at a mini-

mum the “substance” of statements (b) and (c).

As for statement (d), as the SJC pointed out:

The jury also heard evidence that at Bildman’s

direction and without the knowledge of Astra’s

Board, Magnusson [an individual hired by Bild-

man] set up a five-employee satellite office from

which he shredded corporate documents; that he

and Bildman removed Astra documents, inclu-

ding financial documents from Bildman’s office;

and that after receiving a telephone call from

Bildman, Magnusson had company computers

‘erased’.

Id. at 123.

Although the jury was not asked to answer a

specific question on the precise issue of whether

Bildman had “ask[ed] people to destroy records,” the

jury was asked to make an express finding of

whether or not he had misrepresented material facts

to, and/or had withheld material facts from, Astra’s

Board of Directors, which clearly encompasses the

“substance” or the “gist” of the alleged defamatory

statement, namely, that Bildman had engaged “in

our estimation [in] an attempt to cover up and keep

things form his superiors in the company.” This

statement was not merely supported by extensive

evidence, but also established by the jury’s express

findings.

Bildman has not challenged any of the jury’s

express findings or, indeed, any other aspect of the

verdict. In short, the unchallenged jury verdict

established the truth or, at a minimum, the substan-

tial truth of every one of the purportedly actionable

statements. Therefore, the SJC’s judgment is correct

for this additional reason.

Given the independent state-law grounds that

support the SJC’s rejection of Bildman’s negligent

libel claims, the Court should decline review of this

case. See Proxmire, 443 U.S. at 122 (“Our practice is

to avoid reaching constitutional questions if a

dispositive nonconstitutional ground is available.... If

the District Court correctly decided the state law

question, resolution of the First Amendment issue

would be unnecessary” ).

CONCLUSION

For the foregoing reasons, Respondent Astra USA,

Inc. respectfully requests that this Court deny the

petition for certiorari.

April 2, 2010

Respectfully submitted,

JEFFREY S. ROBBINS

A. W. PHINNEY, III*

JOSEPH D. LIPCHITZ

MINTZ, LEVIN, COHN, FERRIS,

(GLOVSKY AND POPEO, P.C

One Financial Center

Boston, MA 02111

(617) 542-6000

AWPhinney@mintz.com

*Counsel of Record for

Respondent

APPENDIX

TABLE OF CONTENTS TO APPENDIX

Page

APPENDIX A: Memorandum Of Decision And

Order On Parties’ Motions For Summary

Judgment, dated October 29, 2001.................. la

APPENDIX B: Suffolk Superior Court Special

Question Verdict Form, dated February 21,

EE ecnsevoreceveerseeccsvseevedeeesees davaeseeece eee 102a

APPENDIX C: Final Judgment After Rescript,

Gates Janwaxry G6, DID os cesesescsssescseeee 109a

APPENDIX A

COMMONWEALTH OF MASSACHUSETTS

SUFFOLK, ss.

SUPERIOR COURT CIVIL ACTIONS

No. 98-0580-C

No. 99-1942-G

ASTRA USA, INC.,

Plaintiff,

VS.

LARS BILDMAN,

Defendant,

VS.

HAKAN MOGREN & another’,

Third-Party Defendants

LARS BILDMAN,

Plaintiff,

vs.

HAKAN MOGREN. & another’,

Defendants

' Carl-Gustaf Johansson.

2 Carl-Gustaf Johansson.

MEMORANDUM OF DECISION AND ORDER ON

PARTIES’ MOTIONS FOR SUMMARY JUDGMENT

This case arises out of the 1996 termination by

Astra USA, Inc. of Lars Bildman as its President and

Chief Executive Officer. Cross motions for summary

judgment are before the court.

BACKGROUND

The undisputed facts and the disputed facts viewed

in the light most favorable to the nonmoving party,

as revealed by the summary judgment record, are as

follows. Swedish company Astra AB, together with its

50 subsidiaries in approximately 40 countries (“the

Astra Group”), is engaged in a worldwide pharma-

ceutical business employing over 20,000 people. Astra

U.S.A. is a New York corporation which until 1999

was a wholly-owned subsidiary of Astra AB and

operated through its own Board of Directors. In 1981,

Lars P.E. Bildman (*“Bildman”) became Astra U.S.A.’s

President, Chief Executive Officer and a member of

its Board of Directors. Hakan Mogren (“Mogren”)

joined the Astra Group in 1988 when he became

President and Chief Executive Officer of Astra AB.

In addition, Mogren served as a director of Astra

U.S.A. beginning in 1988. Car]-Gustaf Johansson

(“Johansson”) joined the Astra Group in 1963 and

in 1995 was elected to the Astra U.S.A Board of

Directors and became Astra’s Regional Director for

North America.

Initially, Bildman’s employment with Astra U.S.A.

was as an Astra AB expatriate, under an agreement

dated April 30, 1981. This expatriate agreement

provided for the payment of specifically enumerated

expenses related to employment abroad. According

to Bildman, the expatriate employment agreement

did not set forth all the terms he had negotiated

with Astra AB’s CEO and President at the time, Ulf

Widengren (“Widengren”). (7/30/01 Bildman Aff. ] 2)°

Between 1981 and 1993, the terms of the expatriate

employment agreement changed many times, based

on negotiations between Bildman and the President

and CEO of Astra AB; however, these changes were

not memorialized.

When Bildman moved to Astra U.S.A. as an expa-

triate, Widegren and Astra AB’s CFO, Peter Sjostrand

(“Sjostrand”), authorized payment by Astra U.S.A. of

routine legal services for Bildman’s benefit. (Tully Dep.,

pp. 25-26). The expatriate employment agreement

itself is silent as to legal services. Bildman believed

that as an expatriate he was entitled to have Astra

U.S.A. pay for his personal legal services, and he

charged personal legal fees involving real estate,

disputes with a neighbor and traffic violations to

Astra U.S.A. As a Swedish citizen, Bildman was

concerned that a traffic violation in the United States

would cause him to lose his driver’s license. Jan B.A.

Janson, the President of Astra Japan, lost his license

due to a traffic violation and Astra had to pay for a

chauffeur to drive him around while his license was

suspended. Bildman therefore believed it was an

appropriate business expense and in accordance with

the terms of his expatriate employment agreement to

have Astra U.S.A. pay for his personal legal fees in

connection with a speeding ticket he received. Bildman

never obtained the authorization of Astra U.S.A.’s

Board of Directors for these personal legal expenses.

° In addition, according to Bildman, the agreement produced

by Astra in this litigation is incomplete and is missing a page

after the signature page which dealt with Bildman’s compensa-

tion. (7/30/01 Bildman Aff. { 2).

In 1976, Bildman was provided with a copy of the

Astra Group General Conditions for Foreign Service

(“General Conditions”) which applied to expatriate

employees. The General Conditions provided that

remuneration and benefits specified in the employee’s

written contract “shall be the total compensation to

which the Employee is entitled.” The General Condi-

tions further provided that the employee could

receive a housing allowance if jointly approved in

advance by the receiving company and Human

Resources, but that “fiJf the Employee purchases a

house or other accommodation in the Country of Ser-

vice, all costs and/or losses in connection with the

buying and selling thereof will be the responsibility of

the Employee” Bildman never asked Astra AB to pay

for the purchase of his home or for any renovations or

improvements to his home when he was employed as

an expatriate.

According to Bildman, the General Conditions

applied only to mid or lower level employees and did

not apply to him or other Presidents of Astra AB

subsidiaries. When he received the revised version of

the General Conditions from Gunnar Chnistiani

(“Christiani”) in 1991, Bildman informed Christiani

and Sjostrand, then Astra’s Regional Director of

North America, that the General Conditions did not

apply to him as President and CEO of Astra U.S.A.

Sjostrand confirmed that the General Conditions did

not apply to Bildman. Bildman refused to sign the

General Conditions.

Around 1992, Johansson, who was then responsible

for Astra AB’s subsidiaries in Southern Europe,

advocated that Astra AB transfer its right to market

Pulmicort Turbuhaler in the United States to

Schering-Plough in return for Schering-Plough

transferring its rights to sell the Pulmicort

Turbuhaler in Italy, France and Spain to the Astra

AB subsidiaries there. (Solvell Dep. Vol V, pp. 692-

693). Bildman was strenuously opposed to this pro-

posal. (Solvell Dep. Vol. V, pp. 694). At a meeting in

Boston, Johansson and Bildman were in such strong

disagreement that they were screaming at each other

and almost came to blows. (Solvell Dep. Vol. V, pp.

693-697; Testen Aff. 9 10). In the end, Astra retained

the marketing rights to Pulmicort Turbuhaler, and

Johansson’s proposal was not adopted. (Solvell Dep.

Vol. V, p. 694).

In September of 1992, Bildman approved an Astra

U.S.A. Administrative Expense Report completed by

Stefan Solvell (“Solvell”) which, in addition to 21

other entries, contained a $500 contribution to the

Hatch Election Committee. In approving expense

reports, Bildman did not read the reports or assess

each individual item included; he merely signed

them. Bildman did not seek any legal advice as to

whether reimbursement of campaign contributions

was legal before authorizing the report, nor did he

disclose his authorization of such reimbursement to

the Board of Directors.

On June 15, 1993, Bildman entered into a direct

employment agreement with Astra U.S.A. (“the

Employment Agreement”). Mogren signed the Employ-

ment Agreement in his capacity as an authorized

representative of the Astra U.S.A. Board of Directors’

Compensation Committee. According to Bildman,

although Mogren signed a portion of the agreement,

he did not sign a portion relating to financial compen-

sation. Bildman repeatedly requested that Mogren

provide him with a signed copy, but Mogren never did.

The Employment Agreement states that it is

effective July 1, 1993 and shall remain in full force

and effect indefinitely until terminated in accordance

with the provisions of Paragraph 4. The Agreement

further states that “all prior agreements and under-

standings governing the Employee’s employment

shall be deemed to have terminated and be of no

further effect, whether such agreements and under-

standings were between the Employee and the Com-

pany or between the Employee and any parent,

subsidiary or affiliated corporation or entity of the

Company.” Under Paragraph 2 of the Employment

Agreement, Bildman agreed:

to assume such duties and responsibilities as are

commensurate with the customary duties of

President and Chief Executive Officer and a

member of the Company’s Board of Directors,

and as may be assigned to the Employee by the

Company’s Board of Directors or by the by-laws

of the Company from time to time, subject to the

supervision, direction and control of the Company’s

Board of Directors, to whom the Employee shall

be responsible.

(Ex. 1 to Mogren Aff. J 2(a)).

Paragraph 3 of the Employment Agreement sets

forth Bildman’s base salary and provides for annual

bonus compensation to be paid in accordance with the

formula set forth in the Company’s annual incentive

bonus plan. Paragraph 3 also provides that Astra

“shall reimburse the Employee for all reasonable

travel, entertainment, and other business expenses

incurred by him in the performance of his duties

and responsibilities, subject to such reasonable re-

quirements with respect to substantiation and docu-

mentation as may be specified by the Company or its

auditors.”

Paragraph 4 of the Employment Agreement sets

forth the various ways in which either party can

terminate the Agreement Paragraph 4(f) provides in

relevant part:

The Employee’s employment hereunder may

be terminated for cause by the Company, effec-

tive immediately, by a vote of a majority of all of

the members of the Board of Directors, on writ-

ten notice to the Employee setting forth in

reasonable detail the nature of such cause. For

purposes of this \greement, “cause” means only:

(i) the willful commission by the Employee of

theft; embezzlement, fraud or other serious and

substantial crimes against the Company, or

(ii) other acts or omissions materially evidencing

bad faith toward the Company, or (iii) conviction

of the Employee of any criminal offense involving

dishonesty or breach of trust or any felony.

The Agreement further provides that “[i]n the event

of the termination of the Employee under this

Paragraph, the Company shall have no further obli-

gation to the Employee hereunder, except any obliga-

tion under any compensation or benefit plan in which

the Employee is then a participant” (Ex. 1 to Mogren

Aff. 71 4(f).

Paragraph 8 of the Employment Agreement provides:

The Company agrees to indemnify the Employee

in his capacity as an officer and member of the

Board of Directors of the Company, all to the

maximum extent permitted under the laws of

the Commonwealth of Massachusetts, from and

against any and all claims, damages, suits, costs,

or liabilities, arising out of or relating to the

performance of his duties and responsibilities as

President and Chief Executive officer. The provi-

sions of this Paragraph 8 shall survive expiration

or termination of this Agreement for any reason.

Paragraph 9 provides:

The Company shall pay to the Employee all

reasonable legal fees and expenses incurred by

him in contesting or disputing any termination of

this Agreement or in seeking to obtain or enforce

any right or benefit provided by this Agreement.

In no event shall the Employee be required to

reimburse the Company for any legal fees or

expenses incurred by it in connection with this

Agreement.

The Employment Agreement states that it consti-

tutes the entire agreement between the parties with

respect to its subject matter and can only be amended

or modified by a writing executed by the employee

and an authorized representative of the company.

(Ex. 1 to Mogren Aff. {J 11, 13). The Agreement also

states that it shall be construed and enforced in all

respects in accordance with Massachusetts law.

(Ex. 1 to Mogren Aff. 7 15).

According to Bildman, the Employment Agreement

did not contain all the terms of his employment.

(7/30/01 Bildman Aff. { 7). Bildman claims that during

negotiations, Mogren agreed to a three year written

severance period, but at the time of execution,

Mogren told Badman that he could not give more

than two years severance in writing because of the

Swedish political climate. (7/30/01 Bildman Aff. ¥ 7).

Upon signing the agreement, Mogren orally agreed to

give Bildman a third year of severance, and the two

men had a separate handshake agreement to that

effect in front of Clauss Wilhelmson (“Wilhelmson’”),

who was then Astra AB’s Regional Director for North

America. (7/30/01 Bildman Aff. J 7). In addition,

although the Employment Agreement provided that

the Astra U.S.A. Directors would determine Bildman’s

compensation, Mogren told Bildman that he and

Wilhelmson would determine Bildman’s compensation,

which they did. (7/30/01 Bildman Aff. J 8). Similarly,

although the agreement provided that Bildman

would serve subject to the supervision, direction and

control of Astra U.S.A.’s Board, Mogren told Bildman

that he would be subject to the supervision, direction

and control of Astra AB. During Bildman’s tenure as

President of Astra U.S.A., he was subject to direct

supervision and control by Mogren and Astra AB,

through Johansson and other Astra AB executives.

(7/30/01 Bildman Aff. 7 6).

Astra U.S.A.’s Travel and Expense Policy and

Guidelines, dated October 1, 1994, state that it is

“Astra’s policy to reimburse employees for actual

expenses that are reasonable and necessary for car-

rying out the Company’s business.” Personal meals in

non-travel status and personal entertainment are

specifically listed as non-reimbursable expenses. The

Travel and Expense Policy provides:

Reasonable entertainment expenses are reim-

bursable, and the expenditure should be incurred

on a common sense basis. These expenses are

reimbursable only if they are directly related to

the active conduct of the company’s business

when directly preceding or following a business

discussion, or are necessary to accomplish some

useful purpose connected with the company’s

business.

10a

¢ To qualify as a business expenditure, enter-

tainment expenses cannot be lavish or extra-

vagant and must be “directly related to” or

“associated with” the company’s business.

e Entertainment expenses must meet the

“directly related test” below:

1. The company must expect to derive income

or some other specific business benefit

other than good will at some future time.

2. The employee/company must engage in

active conduct of the business during the

entertainment with the persons being

entertained.

3. The active conduct of business must be the

primary aspect of the combined business

and entertainment activity.

(Ex. 2 to Yon Dep. p. 16).

According to Bildman, Astra U.S.A.’s Travel and

Expense Policy did not apply to him. As President of

Astra U.S.A., Bildman retained the authority to incur

travel and entertainment expenses within his sole

discretion, provided that such expenses were within

the budget and Bildman believed they would promote

some business purpose. (7/30/01 Bildman Aff. { 9;

Sjostrand Aff. 19 6-8; Broere Aff. 7 9). Further, enter-

taining visiting Astra AB executives with adult

entertainment was encouraged, not prohibited.

(7/30/01 Bildman Aft {| 9).

Bildman authorized payment of several months’

salary to Nan Corcoran, a former Astra employee,

after she filed a claim with the Massachusetts

Commission Against Discrimination alleging sexual

harassment by Bildman. In 1994, Bildman authorized

lla

Astra U.S.A. General Counsel Charles Yon (“Yon”) to

pay $50,000 to former Astra employee Jennifer Shore

in order to settle her claim that Bildman had sexually

harassed her. In 1994, Bildman also authorized Yon

to pay $95,000 to former Astra employee Jennifer

Price to settle her claim that Bildman had terminated

her in retaliation for reporting a complaint that

another employee had been sexually assaulted by

Astra executive George Roadman. Finally, Bildman

authorized Yon to execute a Settlement Agreement

and General Release dated January 5, 1996 paying

former Astra employee Pamela Zortman $100,000 in

settlement of her sexual harassment claims against

Bildman. (Ex. P to Clauss Aff. Bildman Dep. Vol. VI,

pp. 894-896; Ex. 51 to Bildman Dep.). Bildman did

not personally disclose these settlements to Astra

U.S.A.’s Board of Directors and did not obtain Board

approval for them, at least in part because Neal Tully

(“Tully”), counsel to and Secretary of Astra U.S.A.’s

Board of Directors, advised him that Board approval

of the settlements was not necessary. (Tully Dep.,

pp. 125-126). In addition, Tully himself made various

presentations to the Board of Directors in which he

discussed and reported various sexual harassment

claims and settlements. (Tully Dep., pp. 125-130).

In July of 1994, Bildman approved an Astra U.S.A.

Administrative Expense Report completed by

Michael Fox (“Fox”) which, in addition to 19 other

entries, contained a $1,000 contribution by Fox to the

Republican Party and a $100 contribution to the

Blute for Congress Campaign. In approving expense

reports, Bildman did not read the reports or assess

each individual item included; he merely signed

them. After it was discovered that the reimbursements

were improper, Yon wrote Fox, stating that the com-

pany had “unknowingly violated the federal election

12a

laws” and instructing him to pay back Astra U.S.A.

for the campaign contributions. (Bildman Ex. 48).

In 1995, after Mogren promoted Johansson to the

position of Astra AB’s Regional Director for North

America, giving him direct supervisory authority over

Astra U.S.A. and Bildman, the relationship between

Bildman and Johansson became severely strained.

(7/30/01 Bildman Aff. J 33; Yon Interview, pp. 107-108).

Johansson and Bildman repeatedly clashed over

Johansson’s insistence that he and Astra AB had

responsibility for FDA contact in connection with

product marketing, while Bildman maintained that

Fox, Astra U.S.A.’s Vice President of Regulatory

Affairs, had such authority. (2/18/00 Bildman Aff.

{J 11). In addition, Bildman persistently objected

that Johansson was micro-managing Astra U.S.A.’s

affairs, while Johansson repeatedly criticized Bildman

for acting without first obtaining his approval.

(2/18/00 Bildman Aff. {J 13, 16). The relationship

between Johansson and Bildman worsened in early

1996, when Astra AB began exploring the possibility

of a merger between Astra U.S.A. and Astra-Merck,

Inc., a merger to which Bildman was vehemently

opposed. (7/30/01 Bildman Aff. J 32).

In a December 19, 1995 telephone conference,

Bildman, Yon and Astra U.S.A.’s outside employment

counsel William Joy (“Joy”) informed Johansson and

Staffan Ternby, Astra AB’s Director of Public Rela-

tions, that Business Week was investigating allegations

of sexual harassment at Astra U.S.A. (5/11/98

Bildman Aff. J 12). Bildman then assembled a task

force to monitor and investigate Business Week’s

investigation of Astra. (5/11/98 Bildman Aff. J 13).

The members of the task force were Yon; Joy; Arnold

Zenker, a Boston media consultant; Attorney John

13a

Walsh, a New York media and First Amendment

lawyer; Ken Rabin, President of InterScience, a

national public relations firm and Attorney Andrew

Culbert, who had previously worked for Astra AB.

On January 15, 1996, Bildman wrote Mogren and

Johansson, stating that a Business Week reporter was

questioning former and current Astra U.S.A. employees

about allegations of incidents of sexual harassment

at the company. (Johansson Aff. J 6). Bildman stated

that Astra U.S.A. did not have any problems with

sexual harassment and that it was unlikely that any

article would be written. (Johansson Aff. J 6). Mogren

and Johansson did not know and Bildman did not

inform them that several claims of harassment had

been made against him personally. (Mogren Aff. 7 5;

Johansson Aff. J 9). On or about January 16, the task

force prepared a report concluding that Astra U.S.A.

had a good record concerning sexual harassment and

that a competitor such as Astra-Merck, Inc. might be

behind or involved in Business Week’s inquiry.

(5/11/98 Bildman Aff. {| 15). This report was sent to

Mogren and Johansson. (Second Set Ans. to Inter.

No. 15; Bildman Ex. 58). Johansson told Bildman

that he believed that a different competitor, Glaxo,

was behind the Business Week investigation. (5/11/98

Bildman Aff. J 18; Bildman Ex. 30).

In the Spring of 1996, Leonard Decof recommended

to Bildman, Yon and Lars Magnusson that they tape

conversations with Astra employees and officers

because of the Business Week investigation. Bildman

taped several phone conversations he had with

Mogren and Johansson, as well as other Astra execu-

tives, after he became suspicious that they were not

acting in the best interests of Astra U.S.A. The taping

of conversations occurred in a hotel room in Rhode

l4a

Island, where it was not illegal to record conversa-

tions without the other party’s knowledge. According

to Bildman, such taping was standard practice at

Astra. (Bildman Dep. Vol. I, p. 164). Bildman never

reported his taping of conversations to Astra U.S.A.’s

Board of Directors. In April of 1996, Johansson

became enraged when Bildman had his staff perform

an analysis of Johansson’s proposed transfer of

products from Astra U.S.A. to Astra Merck, Inc.

which showed that the transfer would harm Astra

U.S.A. and possibly violate antitrust laws.

On April 19, Mogren, Johansson and several other

executives received from Yon a copy of an April 18

letter to Yon from Mark Maremont (“Maremont”) at

Business Week. (Mogren Aff. {| 21; Johansson Aff. J 12).

Maremont’s seven page letter contained detailed and

serious allegations of sexual harassment and other

misconduct at Astra U.S.A., including misconduct

by Bildman. Johansson, accompanied by Astra AB’s

General Counsel Goran Lerenius (“Lerenius”), and

Thomas Clauss, Jr. (“Clauss”), a partner in the law

firm of Winthrop, Stimson, Putnam & Roberts, went

to Astra U.S.A. to try to learn more about the allega-

tions. On April 22, Joy met with Johansson, Lerenius

and Clauss and reviewed seven sexual harassment

claims which Joy and You had previously investi-

gated and, in some instances, settled. On April 23,

Clauss and Lerenius interviewed Bildman concerning

the allegations in the Maremont letter. Bildman denied

the allegations in the letter and stated that the

questions should be referred to Joy.

On April 25, Johansson received a copy of a 12 page

letter from Maremont to Yon containing additional

details of sexual harassment at Astra U.S.A. and

implicating Bildman. (Ex. 1 to Johansson Aff.). Bildman

l5a

spoke to Mogren, Johansson and Clauss during this

time and answered their questions concerning the

Business Week allegations to the best of his ability.

(7/30/01 Bildman Aff. 4 13).

At a meeting on April 28, 1996, the Astra U.S.A.

Directors unanimously voted to establish a Special

Committee to retain experts to assist in an investiga-

tion of the allegations against Bildman. (Mogren Aff.

{ 25). Johansson was made chairman of this Special

Committee. (Carling Aff. J 6). Bildman was suspended

with pay, and Jan Larsson (“Larsson”) was appointed

as Astra U.S.A.’s President and Chief Executive

Officer. (Mogren Aff. 19 25, 26). That same day,

Johansson wrote Bildman informing him of the

suspension and stating: “ASTRA expects that during

your suspension you will be available during normal

business hours to cooperate with the Company’s efforts

to investigate the allegations and otherwise act in the

best interest of the Company and in accordance with

the obligations of your employment agreement.” The

letter further stated, “Because of the investigation,

you should not contact any employees or ex-employees

of the Company except for the Director of Human

Resources if you have questions about health and

welfare benefits and Jan Larsson or Goran Lerenius

about the investigation. All other employees have or

will be instructed not to communicate with you until

the investigation is complete.” (Ex. 2 to Johansson Aff.).

On April 29, Johansson gave a speech to Astra

U.S.A. employees in which he stated:

The first action is that Mr. Lars Bildman has

been suspended and relieved of his corporate

responsibilities pending the results of an inves-

tigation into allegations of improprieties within

the company that occurred during his tenure as

16a

CEO. Although his future role in the Astra

Group is uncertain, he will not be returning to

Astra USA in any future capacity.

The second action taken yesterday was that a

committee of the Board of Directors of Astra USA

has retained independent counsel to assist it in

performing the investigation. The investigation

is expected to take several weeks, and will

include an examination of allegations of sexual

harassment and other activities considered inap-

propriate by the company.

The same day, Astra issued a news release entitled

“Astra Elects New President and CEO” which stated:

Mr. Larsson replaces Lars Bildman, who has

been suspended and relieved of his corporate

responsibilities pending the results of an investi-

gation into allegations of improprieties within

the company that occurred during his tenure as

& tS

The investigation is expected to take several

weeks, and will include an examination of allega-

tions of sexual harassment and other activities

considered inappropriate by the company. .

A preliminary investigation by senior company

officials resulted in the decisions announced today.

Also on April 29, Astra issued a press release con-

taining identical statements.

The Board of Directors retained Winthrop, Stimson,

Putnam & Roberts to conduct the investigation. Clauss

oversaw a team of lawyers and paralegals which

interviewed over 100 witnesses, including present

and former Astra U.S.A. employees and officers, sub-

contractors and vendors, and officers and employees

17a

of other Astra Group companies. (Clauss Aff. J 2-6).

In addition, the team reviewed thousands of pages of

documents and other materials, including files from

Astra U.S.A.’s finance, personnel and legal depart-

ments, and documents from vendors and subcontrac-

tors, including outside counsel who had handled the

sexual harassment claims. (Clauss Aff. J] 2-6). During

the investigation, Bildman contacted or attempted to

contact at least 18 Astra employees, 14 of whom were

individuals being interviewed by Astra’s investigators.

(Bildman Dep. Vol. V, pp. 771-780; Healey Aff. 7] 5-7).

On May 3, 1996, the Wall Street Journal published

an article entitled “Astra USA Investigates Alleged

Misuse of its Funds by Suspended CEO, Others”

which stated:

[spokesman] Mr. Kincannon said that Astra AB

officials grew concerned when Mr. Bildman was

‘not forthcoming’ to them in handling inquiries

from Business Week magazine about possible

sexual harassment at Astra USA. “He assured

them that nothing was wrong,” Mr. Kincannon

said.

That same day, the Boston Globe published an article

entitled “Astra: CEO Allegedly Harassed Women:

Says suspended Bildman also tried to cover up

actions” which stated: “Bildman told executives at

Astra USA’s Stockholm parent company last December

that a reporter was looking into sexual harassment

claims at its US subsidiary, said Benjamin Kincannon,

Astra U.S.A. spokesman. But ‘he downplayed it,’

Kincannon said.”

On May 138, 1996, Mogren addressed Astra’s

Annual Meeting on the issue of “Improprieties at

Astra USA, Inc.” and stated:

18a

But as a result of preliminary investigation at

the end of April, we were able to confirm that a

violation had been made of the fundamental prin-

ciples for working at Astra and of the culture that

we have developed in the Group as a whole....

Concerning the sexual harassment now in

question, it should be said that what has

occurred is at beast a violation of good style and

form. At worst, a number of our employees have

also been caused inconveniences or suffering. To

the extent this may have occurred, we are deeply

regretful. We will do everything we can to

prevent it from ever happening again... .

As soon as we in Astra’s corporate management,

through our preliminary investigation, were

practically certain that serious had happened, we

swiftly set in a number of measures.

First, the CEO and two colleagues of the Ameri-

can subsidiary were suspended....

What has happened is that some people have

tried to put themselves above the rules, at the

same time that they have made great efforts to

cover up what has happened.

Also on May 13, Business Week published an article

by Maremont entitled “Abuse of Power: the asto-

nishing tale of sexual harassment at Astra’s U.S.

pharmaceutical subsidiary.” The article contained the

following statements:

On April 29 as Business Week was about to

publish the results of a six-month investigation

into allegations of rampant sexual harassment at

Astra, Bildman was suspended and relieved of

his responsibilities by Astra’s parent, giant

Swedish drug-maker Astra AB....

19a

Senior Astra executives acknowledged that

Business Week’s investigation sparked the abrupt

action. Although Bildman had told superiors

about the investigation months ago, Carl-Gustaf

Johansson, a member of Swedish Astra’s executive

committee, says the company was unaware of the

full scope of the allegations until it received a

lengthy letter from Business Week on April 19.

“We hadn’t heard anything this detailed—and

certainly not that Mr. Bildman himself was

the focus” of some allegations, says Johansson.

Refusing further comment on Astra’s own pre-

liminary inquiries—which also now include

allegations of major financial improprieties by

Bildman—Johansson says Astra suspended its

U.S. CEO because “we lost some trust in him.”

On May 24, 1996, the Boston Globe published an

article entitled “Astra AB’s chief says Bildman won’t

be back,” which stated:

Astra AB Chief Executive Hakan Mogren said

Lars Bildman, the suspended chief executive

of the company’s scandal-plagued U.S. unit in

Westboro, will not return to the position he had

occupied for the past 15 years.

“It would be impossible to have him back in

that job. How could people work together and

create a good atmosphere?” Mogren said in New

York.

Also on May 24, the Boston Herald published an

article entitled “Suspended Astra Exec Won’t Return”

which contained identical statements.

In May of 1996, Kincannon appeared on a CBS

News “Eye on the Nation” segment concerning the

allegations of sexual harassment at Astra U.S.A.

20a

When asked whether Bildman would return to

Astra U.S.A., Kincannon replied that he would not.

Kincannon based this response on newspaper reports

that, according to Mogren, Bildman would not be

returning.

Throughout the investigation, Bildman, through

his counsel, declined to be interviewed or to answer

questions in person posed by the Special Committee,

either orally or in writing. (Clauss Aff. {{] 12-17).

Counsel for Bildman met with the investigators, pro-

vided a denial of the general allegations of misconduct

and offered to produce additional information to

investigators if they would state the specific basis for

the allegations. Although Bildman requested that

Astra provide him with a list of specific allegations

being investigated so that he could respond, the

investigators refused to do so. However, on June 7,

1996, Astra investigators wrote Bildman’s counsel,

setting forth a list of nine specific questions for him

to answer. Bildman did not respond to this letter. In

refusing to cooperate, Badman consistently expressed

concern about the bias and pre-ordained results of

the investigation.

The Special Committee presented Astra U.S.A.’s

Board of Directors with a Draft Report on June 13,

1996, describing the scope of its investigation and

summarizing its conclusions. The Draft Report

opined that there was substantial evidence that

Bildman had engaged in the sexual harassment of

female employees, received personal benefits from

services performed by Astra vendors and paid for by

Astra, received reimbursement for improper business

expenses such as personal vacations, travel, and legal

fees for personal matters and attempted to impede

the investigation by contacting Astra employees and

Zla

vendors and destroying documents. (Ex. D to Clauss

Aff.). On June 25, 1996, Johansson and Clauss pre-

sented the Special Committee’s final report to the

Board of Directors. The Board unanimously voted to

terminate Bildman’s employment for cause under

paragraph 4(f) of the Employment Agreement. (Ex. E

to Clauss Aff.; Johansson Aff. J] 26). Despite prior

notification that the Board intended to vote on his

termination, Bildman declined to attend the June 25

meeting. (Johansson Aff. 7] 24-25).

On June 26, 1996, Astra AB issued a news release

which stated:

Astra USA today announced the termination of

Lars Bildman, the former President and CEO of

the company. Bildman had been suspended on

April 28, 1996 pending the results of an inves-

tigation into improprieties within the company

that occurred during his tenure as CEO....

Bildman’s termination was announced at a press

conference at which Astra officials commented on

the investigation by the company into allegations

of sexual harassment, financial improprieties,

and other activities considered inappropriate by

the company.

Bildman chose not to cooperate with the

investigation.

“Our investigation uncovered management beha-

vior under Mr. Bildman that is unacceptable to

Astra,” said Executive Vice President C.G.

Johansson of Astra AB, who headed the inves-

tigating committee established by the Board of

Astra USA....

22a

The investigation showed evidence of a variety of

improper activities, including misuse of company

funds, inappropriate behavior at company func-

tions, disregard of established company rules and

procedures, and a neglect by Mr. Bildman to

keep the parent company informed of these

problems at its subsidiary.

There is evidence that Mr. Bildman used company

funds for personal expenses, including renovations

to his houses and vacations. Approximately

$2 million was involved... ..

According to Astra’s investigation, Bildman

attempted to deflect attention away from himself

by claiming that enemies of the company were

behind the media’s scrutiny of Astra USA and

himself. There is no evidence to support this.

Astra’s investigation did show that Mr. Bildman

went to great lengths to keep his behavior secret

from the superiors in the Astra Group. He rented

office space offsite for the purpose of keeping

information from the parent company... .

Astra also issued a press release on June 26 contain-

ing identical statements.

At a press conference on June 26, Johansson stated:

In December, Mr. Bildman informed me that a

journalist was making inquiries about Astra

USA that included questions about alleged sexual!

harassment at the company. Mr. Bildman assured

me that there was nothing to worry about He

also did not mention that he himself was a focal

point of the inquiries.

Mr. Bildman was asked on a number of occasions

after that whether any of the allegations

23a

involved him. He was also asked whether Astra

USA had anything to be ashamed of He said no.

On April 19, we received in Sweden a letter from

Business Week. .. We were shocked by what we

read....

Mr. Bildman refused to cooperate with the

investigation. ...

Mr. Bildman was terminated because he violated

the trust that had been placed in him by the

Astra Group. His style of leadership was unac-

ceptable. And certain of his actions were

unprofessional and hurtful to the morale of the

employees.

Our investigation also found that Mr. Bildman

exhibited inappropriate behavior at company

functions, primarily internal sales meetings held

off company premises... .

There is evidence that Mr. Bildman used company

funds for personal expenses, including renovations

to his houses and vacations. Approximately

$2 million was involved... .

Our investigation also showed that Mr. Bildman

went to great lengths to keep his behavior secret

from his superiors in the Astra Group. He rented

office space offsite for the purpose of keeping

information from the parent company.

According to our investigation, Bildman attempted

to deflect attention away from himself by claiming

that enemies of the company were behind the

media’s scrutiny of Astra USA. .d himself.

There is no evidence to support this.

In all of these activities, Mr. Bildman displayed a

disregard for both established rules and proce-

24a

dures of the Astra Group and for the high ethical

principles that are implicit in our corporate

culture. ...

Because of the unprofessional actions of one

person in one of our 45 subsidiaries, the Astra

name has become associated with activities that

are the complete opposite of the high ethical and

moral principles for which we have been known

for over eight decades... .

But there is no doubt that Lars Bildman abused

his power as President of Astra U.S.A. Our inves-

tigation uncovered management behavior under

Mr. Bildman that is unacceptable to Astra. ...

This is the end of an unfortunate and distasteful

chapter in the history of Astra U.S.A.

Following his suspension and termination, Bildman

became severely depressed. He experienced difficulty

sleeping and suffered from stomach aches. (7/30/01

Bildman Aff. J 29). He met with a psychiatrist through

October of 1996 and was prescribed prozac and

klonopin. (7/30/01 Bildman Aff. J 29). When Bildman

was terminated, Astra’s Human Resources Department

determined all amounts he had earned or vested under

the applicable compensation, bonus and benefit plans,

and distributed said amounts according to the terms

of the plans and certain orders of the Norfolk County

Probate Court.‘ (Tetrault Aff. J 8).

At the time of his termination, Bildman was a

participant in Astra’s Long Term Management Stock

Plan and its Profit Sharing Plan. Under his Employ-

ment Agreement, Bildman was also entitled to

participate in the Executive Bonus Program, which

* Bildman was in the process of obtaining a divorce in Norfolk

County Family and Probate Court Action No. 96D-2672-DIV.

25a

entitled him to earn a bonus above his base salary

depending on Astra AB’s performance. (6/30/01

Bildman Aff. 9] 12; Tully Dep., p. 96). Although Astra

paid Bildman executive bonuses for 1993 and 1994, it

never paid him executive bonuses earned for 1995

and 1996.

Participants in the Long Term Management Stock

Plan are eligible for annual grants of Astra AB com-

mon stock but may only earn stock rights over a

period of years if certain performance goals are

achieved. (Ex. 2 to Tetrault Aff., p. 4). Following the

expiration of the required three year holding period,

on January 1, 1996, Bildman received a distribution

of 7,172 shares of stock, with a value of $286,808.

(Tetrault Aff. 9] 9d). A portion of Bildman’s potential

executive bonus had been shifted to the Stock Plan.

(Tully Dep., p. 96). Accordingly, on March 13, 1996,

Bildman received a 1996 Award Statement and

executed a Letter Agreement for the grant of Astra

AB stock equal to $150,000 for the 1996 plan year,

with 25 percent of the grant to be earned in each year

in which pre-established performance goals were met.

(Ex. 3 to Tetrault Aff.). Since the first performance

objective was not measured until the end of 1996,

Bildman did not and could not have met it as of the

date of his termination. (Tetrault Aff. ] 9g). The 1996

Award Statement was also subject to the terms of the

Stock Plan, which provided that upon termination for

cause, “no shares shall be released to the Participant

unless performance objectives and the Holding Period

have been satisfied. Shares for which the perfor-

mance objectives and Holding Period have not been

satisfied shall be forfeited.”

The Profit Sharing Plan entitled Bildman to obtain

compensation based on the performance of Astra AB.

26a

The Plan states that “[ilf a Participant’s employment

is terminated for any reason other than his death,

Disability or attainment of Normal Retirement Age,

he shall be entitled to receive his vested Account

balance.” (Ex. 5 to Tetrault Aff.). Bildman’s vested

account balance as of June 30, 1996 was $90,917.77.

(Tetrault Aff J 10c). Astra distributed this balance to

Bildman and his former wife in accordance with a

May 12, 1998 Order of the Norfolk Probate and Family

Court. (Tetrault Aff. { 10(e)). According to Bildman,

although Astra paid him profit sharing for 1993 and

1994, it never paid him profit sharing earned for

1995 and 1996. (6/30/01 Bildman Aff. 4 12).

On January 26, 1998, following several days of trial

in the local United States District Court before the

Honorable Nathaniel Gorton, Bildman pleaded guilty

to Counts 27 through 29 of a Superseding Indictment

which charged him with committing the crime of

willfully making and subscribing a tax return which

he did not believe to be true and correct for the

calendar years 1993, 1994 and 1995. Count 27 of the

Superseding Indictment (False Tax Return 26 U.S.C.

§7206(1)) stated:

29. The grand jury realleges and incorporates

by reference paragraphs one through seven and

ten through twenty-one of this indictment, and

further charges that:

30. On or about April 15, 1994, in the District

of Massachusetts and elsewhere, defendant LARS

BILDMAN a resident of Brookline, Massachu-

setts, did willfully make and subscribe a joint

United States Individual Income Tax Return, for

the calendar year 1993, which was verified by a

written declaration that it was made under the

penalties of perjury and was filed with the

27a

Internal Revenue Service, which said income tax

return he did not believe to be true and correct

as to every material matter in that said

return reported an adjusted gross income of

$1,008,548.00, whereas, as he then and there

well knew and believed, he received compensa-

tion in the form of goods and services in addition

to that reported on his filed income tax return.

All in violation of Title 26 United States Code,

Section 7206(1).

Count 28 of the Superseding Indictment (False Tax

Return 26 U.S.C. § 7206(1)) stated:

31. The grand jury realleges and incorporates

by reference paragraphs one through seven and

ten through twenty-one of this indictment, and

further charges that:

32. On or about October 24, 1995, in the Dis-

trict of Massachusetts and elsewhere, defendant

LARS BILDMAN a resident of Brookline, Mas-

sachusetts, did willfully make and subscribe a

joint United States Individual Income Tax

Return, for the calendar year 1994, which was

verified by a written declaration that it was

made under the penalties of perjury and was

filed with the Internal Revenue Service, which

said income tax return he did not believe to be

true and correct as to every material matter in

that said return reported an adjusted gross

income of $1,030,916.00, whereas, as he then and

there well knew and believed, he received

compensation in the form of goods and services

in addition to that reported on his filed income

tax return.

All in violation of Title 26 United States Code,

Section 7206(1).

28a

Count 29 of the Superseding Indictment (False Tax

Return 26 U.S.C. § 7206(1)) stated:

33. The grand jury realleges and incorporates

by reference paragraphs one through seven and

ten through twenty-one of this indictment, and

further charges that:

34. On or about April 14, 1996, in the District

of Massachusetts and elsewhere, defendant LARS

BILDMAN a resident of Brookline, Massachu-

setts, did willfully make and subscribe a joint

United States Individual Income Tax Return, for

the calendar year 1995, which was verified by a

written declaration that it was made under the

penalties of perjury and was filed with the

Internal Revenue Service, which said income tax

return he did not believe to be true and correct

as to every matcrial matter in that said

return reported an adjusted gross income of

$1,124,.373.00, whereas, as he then and there

well knew and believed, he received compensa-

tion in the form of goods and services in addition

to that reported on his filed income tax return.

All in violation of Title 26 United States Code,

Section 7206(1).

Paragraphs 1 through 7 and 10 through 21 of the

Superseding Indictment allege a conspiracy whereby

Bildman and Lars Magnusson obtained over one

million dollars worth of personal benefits, including

home improvements, landscaping, home furnishings,

personal vacations and prostitutes, which were

allegedly paid by Astra under the guise of business

expenses.

In a change of plea hearing on January 26, 1998,

an Assistant United States Attorney (“AUSA”) told

29a

the court that “Mr. Bildman is offering a plea to

Counts 27, 28 and 29, Paragraph 30, 32 and 34

contained in those.” The AUSA then stated that “the

full conversation in chambers was that the preliminary

paragraph in each of those counts incorporates by

reference some of the earlier language in the indict-

ment. The Government does not understand Mr.

Bildman to be pleading to the fraud language but is

relying upon the language which is—which lays out

the items of income which Mr. Bildman received, and

in that extent alone the Government is relying upon

that introductory paragraph.” Bildman’s attorney

stated that he understood, “Not as to each and every

item, but certainly the substantial number of items

which constitute the false statement in the tax return.”

When the court asked the AUSA what facts the

Government would prove if the matter proceeded

through trial, the AUSA stated:

as the government outlined in its opening

statement and so as to not repeat each and every

thing that was said during the opening state-

ment, I will rely upon that; but as the Govern-

ment set forth in its opening statement, Your

Honor, the Government would prove beyond a

reasonable doubt that should this trial continue

to a verdict, that Defendant Bildman received

goods and services which were taxable to him,

that he knew that those goods and services were

to be reported on his Individual Income Tax

Return, Form 1040, and that he did not report

the value of those goods and services on his

Income ‘I'ax Returns filed with the United States

under the penalties of perjury on or about the

dates set forth in Counts 27 through 29 Your

Honor.

30a

(Ex. 6 to Bildman Dep. pp. 5-12, 5-13). Bildman agreed

with this statement of the facts. (Ex. 6. to Bildman

Dep., p. 5-13). At the sentencing hearing, the court

found that Bildman’s unreported income was in

excess of $1 million and that Bildman used a sophis-

ticated means to impede the discovery of his crime.

On February 4, 1998, Astra U.S.A. filed Civil

Action No. 98-0580 against Bildman, alleging fraud

in Count I of the complaint, breach of fiduciary duty

in Count Il, waste of corporate assets in Count III

and conversion in Count V. The complaint sought

recission of the Employment Agreement in Count IV.

Also on February 4, Ivan Rowley, President of Astra

U.S.A., announced a settlement of sexual harassment

charges against the company, stating:

In May, 1996, the Equal Employment Opportu-

nity Commission initiated its investigation into

allegations of sexual harassment at Astra USA.

Before that, Astra had begun its own internal

investigation and had suspended the CEO and

two other senior executives. Astra took these

actions immediately after learning of the allega-

tions.

Astra’s cooperation with the EEOC investigation

was a natural extension of Astra’s own investiga-

tion and other steps already taken by the com-

pany. Our cooperation was based on a common

desire with the EEOC to get at the truth and

rectify whatever damage had been done to

current and former Astra employees.

On February 5, 1998, Astra U.S.A. issued a press

release containing identical statements.

3la

Also on February 5, the Boston Globe published an

article entitled “$10M Astra Settlement is Expected”

which stated:

A federal agency is expected today to announce

that Astra USA Inc. agreed to pay $10 million to

settle allegations of sexual harassment and

attempts to cover it up during the scandalous

tenure of ousted chief executive Lars Bildman. .. .

Astra USA said it wants “any amounts paid as a

result of the investigation” by EEOC. Sources

familiar with the negotiations put the settlement

at $10 million. ...

“His actions—asking people to destroy records

and the like—are in our estimation an attempt to

cover up and keep things from his superiors in

the company,” Astra USA’s spokesman, Benjamin

Kincannon, said yesterday.

The Middlesex News published an article on February

5 entitled “Astra Settles Federal Harassment Suit:

Record Setting Deal Ends EEOC Probe” which

reported Astra’s filing of a lawsuit against Bildman

and stated: “Kincannon said that the rest of the

damages would cover legal costs, including the cost

of an internal investigation in early 1996. Astra’s

lawsuit also demands that Bildman repay the company

for any fines and settlements from the EEOC inves-

tigation.” On February 6, 1998, the Boston Herald

published an article entitled “Astra-Nomical: firm

settles sex harass claims for $9.85 Million” which also

referred to Astra’s civil suit stating: “Astra admitted

the suit is partly an effort to stick the former CEO

with the bill for EEOC settlement.”

Thereafter, on April 28, 1999, Bildman filed Civil

Action No. 99-1942 against Astra AB, Mogren and

32a

Johansson, alleging intentional interference with

contractual relations in Count I of his complaint and

intentional infliction of emotional distress in Count II

On October 12, 2000, Bildman filed an amended

counterclaim and third-party complaint against Astra,

Mogren and Johansson in Civil Action No. 98-0580.

Count I of the counterclaim alleges breach of contract

against Astra; Count II seeks indemnification from

Astra for costs and expenses incurred in this action;

Count II] seeks indemnification for costs and expenses

incurred in connection with the 1998 indictments and

Counts IV, VI and VII* allege libel against Astra,

Mogren and Johansson.

DISCUSSION

Summary judgment shall be granted where there

are no genuine issues as to any material fact and

where the moving party is entitled to judgment as a

matter of law. Mass. R. Civ. P. 56(c); Cassesso v.

Commissioner of Correction, 390 Mass. 419, 422

(1983); Community Natl Bank v. Dawes, 369 Mass.

550, 553 (1976). The moving party bears the burden

of affirmatively demonstrating the absence of a triable

issue, and that the summary judgment record entitles

the moving party to judgment as a matter of law.

Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). The

moving party may satisfy this burden either by sub-

mitting affirmative evidence that negates an essential

element of the opposing party’s case or by demon-

strating that the opposing party has no reasonable

expectation of proving an essential element of his

case at trial. Flesner v. Technical Communications

Corp., 410 Mass. 805, 809 (1991); Kourouvacilis v.

General Motors Corp., 410 Mass. 706, 716 (1991).

° The counterclaim does not include a Count V.

33a

I. Cross-Motions for Summary Judgment on Count I

of Bildman’s Counterclaim

Count I of Bildman’s counterclaim alleges that

Astra breached the June 15, 1996 Employment

Agreement by refusing to pay him bonuses and other

compensation earned before his suspension on April

28, 1996 and his termination on June 25, 1996. Count

I also alleges that Astra breached the Employment

Agreement by refusing to pay Bildman’s reasonable

legal fees and expenses incurred in challenging his

termination and enforcing his rights under the

agreement. Astra moves for summary judgment on

this count, asserting that because it had cause to

terminate Badman under the Employment Agreement,

it has no further obligations to him with respect to

either compensation or legal fees.

It is well-established that a material breach of

contract by one party excuses the other party from

future performance under the contract Quintin Vespa

Co. Inc. v. Construction Serv. Co., 343 Mass. 547, 554

(1962); Hastings Assoc., Inc. v. Local 369 Bldg. Fund,

Inc., 42 Mass. App. Ct. 162, 171, rev. den., 424 Mass.

1108 (1997). Paragraph 4(f) of the Employment

Agreement provides that upon termination for cause

under that paragraph, Astra U.S.A. “shall have no

further obligation to the Employee hereunder, except

any obligation under any compensation or benefit

plan in which the Employee is then a participant.”

However, the Profit Sharing Plan entitles an employee

who is terminated for cause to receive his vested

account balance, and therefore Astra is not relieved

of its obligations under the plan by virtue of Bildman’s

alleged material breach of the Employment Agree-

ment. See Walsh v. Atlantic Research Assoc., Inc., 321

Mass. 57, 62-63 (1947) (concluding that employee

34a

who was justifiably terminated for materially breach-

ing his employment contract could still recover

earned compensation where contract so provided). On

the present summary judgment record, an issue of

disputed fact exists with respect to whether Astra

has satisfied its obligations under the Profit Sharing

Plan. Thus, Astra is not entitled to judgment as a

matter of law on Count I insofar as it alleges breach

of contract based on profit sharing.

Count I of Bildman’s counterclaim also alleges that

Astra breached the Employment Agreement by

failing to pay him an executive bonus, part of which

was earned under Astra’s Stock Plan. Under the

Stock Plan, an employee terminated for cause forfeits

any unvested shares. Astra contends that the sum-

mary judgment record demonstrates as a matter of

law that it properly terminated Bildman for cause.

Paragraph 4(f) of the 1993 Employment Agreement

between Bildman and Astra U.S.A. provides in

relevant part:

The Employee’s employment hereunder may

be terminated for cause by the Company, effec-

tive immediately, by a vote of a majority of all

of the members of the Board of Directors, on

written notice to the Employee setting forth in

reasonable detail the nature of such cause. For

purposes of this Agreement, “cause” means only:

(i) the willful commission by the Employee of

theft, embezzlement, fraud or other serious and

substantial crimes against the Company, or (ii)

other acts or omissions materially evidencing bad

faith toward the Company, or (111) conviction of

the Employee of any criminal offense involving

dishonesty or breach of trust or any felony... .

35a

In order to properly terminate Bildman under

Paragraph 4(j), Astra had to have a reasonable, good

faith basis for believing he had engaged in misconduct

which, under the terms of the Employment Agree-

ment, would justify his termination. Compare Goldhor

v. Hampshire Coll., 25 Mass. App. Ct. 716, 722

(1987); Kletn v. President & Fellows of Harvard Coll.,

25 Mass. App. Ct. 204, 208 (1987); Hamilton v.

Baystate Med. Educ. & Research Found., 866 F. Supp.

51, 55 (D. Mass. 1994), aff'd, 66 F.3d 306 (1st Cir.

1995) (in absence of contractual definition, “just cause”

permits termination of employee where there exists

reasonable, good faith basis for employer dissatisfac-

tion such as culpable or inappropriate behavior).

Astra contends that in analyzing whether there

was cause to terminate Bildman, this Court must

give deference to the Board of Directors’ decision

under the business judgment rule, which shields

officers and directors from liability for corporate deci-

sions made in good faith after due care. See Abbot v.

Waltham Watch Co., 260 Mass. 81, 93 (1927); Resolu-

tion Trust Corp. v. Gladstone, 895 F. Supp. 356, 369

(D. Mass. 1995). Compare Foster v. Churchill, 626

N.Y.S.2d 115, 118 (A.D. 1 Dept. 1995), aff'd, 87N.Y.2d

744 (1996) (concluding that under Delaware law,

business judgment rule applied to company’s decision

to terminate two officers, affording presumption that

decision made in good faith and in company’s best

interest). However, the business judgment rule does

not apply where a plaintiff alleges and demonstrates

self-dealing by the board, or bad faith or unreasona-

bleness in the investigation leading to the board deci-

sion. See Harhen v. Brown, 431 Mass. 838, 844-847

(2000) (discussing corporate board’s decision not to

pursue litigation demanded by shareholders); Johnson

v. Witowski, 30 Mass. App. Ct. 697, 712, rev. den.,

36a

411 Mass. 1104 (1991) (discussing board’s approval of

corporate acquisition transaction).

Because the summary judgment record raises a

fundamental underlying dispute as to whether the

Board’s investigation of Bildman and decision to ter-

minate him were undertaken objectively, fairly and

in good faith, at least for purposes of the present

motions this Court will not afford the Board’s decision

any deference or presumption of good faith. See,

e.g., 7/30/01 Bildman Affidavit; Solvell Deposition,

pp. 693-697; DeCof Deposition, pp. 82-83, 103, 121,

142; Clauss Deposition, pp. 6-9, 166-168; Ianelli

Deposition, pp. 202-208; Aarons Deposition, pp.720-725;

Lasagna Deposition, pp. 28-71; Bildman Exhibits 4,

11-17, 70, 72, 74, 76.

Astra contends that Bildman’s plea to three tax

felonies constitutes cause for termination under

Paragraph 4(f) (iii) of the Employment Agreement as

a matter of law.® Invoking the after-acquired

evidence doctrine, Astra contends that Bildman’s

guilty plea on January 26, 1998 to filing a false tax

return, because the improper tax filings occurred

when he was Astra U.S.A.’s President, constitutes

cause for termination under Paragraph 4(fN(iii) even

though his plea was entered after his termination.

In the employment context, after-acquired evidence

refers to evidence of an employee’s wrongdoing, dis-

covered by the employer after terminating the

employee, that would have justified the employee’s

immediate termination had it been discovered

has been a finding of guilt by a jury or judge, entry of a formal

guilty plea or admission to sufficient facts. Commonwealth v.

Jackson, 45 Mass. App. Ct. 666, 670 (1998).

37a

earlier. See McKennon v. Nashville Banner Pub. Co.,

513 U.S. 352, 356 (1995). Many jurisdictions allow an

employer to assert after-acquired evidence as a com-

plete bar to an employee’s contract-based wrongful

discharge claim and to limit the measure of equitable

relief and damages in statutory wrongful discharge

claims such as those involving discrimination or

retaliation under workers’ compensation schemes.

See Anna, “After-Acquired Evidence,” 34 A.L.R. 5th

699 (1995); accord Restatement (Second) of Contracts

§ 237, comment c, illustration 8 (1979). Assuming

without deciding that Massachusetts law allows an

employer to assert after-acquired evidence of an

employee’s misconduct as a complete bar to the

employee’s breach of contract claim,’ Bildman’s federal

tax convictions nonetheless do nct constitute a

defense in the present case.

Astra has not cited, nor has this court found,

authority in any jurisdiction establishing that an

employee’s conviction of a crime after his discharge

may be used as after-acquired evidence to justify

7 In the only Massachusetts case to address after-acquired

evidence, the court held that with respect to a claim under G.L. c.

151B, an employer could not use after-acquired evidence of

wrongdoing to justify an employee’s termination. See Boston v.

Massachusetts Comm’n Against Discrimination, 39 Mass. App.

Ct. 234, 239-240 (1995). Similarly, the First Circuit has followed

the reasoning of the Supreme Court with respect to statutorily-

based wrongful discharge claims, concluding that because there

is an overriding public policy at stake in such cases, after-

acquired evidence of employee misconduct does not bar all

recovery but rather limits the employee’s damages. See Nieves-

Villanuera v. Soto-Rivera, 133 F.3d 92, 101 (1st Cir. 1997)

(claim under 42 U.S.C. § 1983 that discharge was due to

employees’ political affiliation); Serafino v. Hasbro, Inc., 82 F.3d

515, 519 (1st Cir. 1996) (claim that discharge was retaliation for

employee’s exercise of First Amendment rights).

38a

termination under an employment contract permitting

termination for conviction of a crime. Cf. Washington

v. Lake County, 969 F.2d 250, 256 (7th Cir. 1992),

modified, by McKennon, 513 U.S. 352 (concluding

that employee’s conviction of crime before his hiring,

and his concealment of that conviction on his employ-

ment application, constituted after-acquired evidence

which may provide defense to wrongful termination

claim). Aside from cases involving after-acquired

evidence of resume fraud, in all the reported cases

the employee misconduct proffered as after-acquired

evidence occurred during the term of the employment

and thus provided a legal ground for terminating the

employee at the time of the actual discharge. See,

e.g., McDill v. Environamics Corp., 757 A.2d 162,

165-166 (N.H. 2000) (after-acquired evidence that

employee copied confidential facsimile before his termi-

nation); Gassman v. Evangelical Lutheran Good

Samaritan Sod., Inc., 921 P.2d 224, 225-226 (Kan.

App. 1996), affd, 935 P.2d 743 (1997) (after-acquired

evidence that before her termination, employee

violated company policy by entering director’s office

without authorization and taking copy of videotaped

meeting); Schuessler v. Benchmark Mktg. & Consulting,

Inc., 500 N.W.2d 529, 539-540 (Neb. 1993) (after-

acquired evidence that vice-president, during employ-

ment, sexually harassed female employee).

In this case, although Astra contends that the

misconduct underlying Bildman’s convictions occurred

while he was employed as President, the convictions

themselves did not occur until after Astra had termi-

nated his employment. The convictions thus could not

have provided “cause” for Bildman’s discharge on the

date of his termination, June 25, 1996. Accordingly,

Astra is not entitled to summary judgment on Count

I of Bildman’s counterclaim on the ground that

39a

Bildman’s conviction of the federal tax felonies consti-

tutes cause for his termination under Paragraph

4(f\(iii) of the Employment Agreement.

Astra also moves for judgment as a matter of law

under Paragraph 4(j)(i) of the Employment Agreement,

which provides that “the willful commission by the

Employee of theft, embezzlement, fraud or other

serious and substantial crimes against the Company”

constitutes cause for termination. Astra contends

that in the course of pleading guilty to three counts of

filing a false tax return in violation of 26 U.S.C.

§ 7206(1), Bildman admitted that he received the

benefit of home renovations, prostitutes and family

vacations paid for by Astra and is thus collaterally

estopped from relitigating in this action whether he

in fact received such benefit. Therefore, according to

Astra, Bildman as a matter of law committed theft or

fraud suficient to justify his termination. Specifically,

Astra argues that by pleading guilty to Counts 27, 28

and 29 of the Superseding Indictment, Bildman

admitted the factual allegations underlying those

charges and incorporated by reference therein.

Bildman, however, denies admitting to those under-

lying facts. He claims that he pleaded only to

Paragraphs 30, 32 and 34 of Counts 27, 28 and 29,

which contain allegations concerning the legal ele-

ments of the crime of filing a false tax return but do

not contain or incorporate by reference any of the

specific facts underlying the charges.

Under the doctrine of collateral estoppel, or issue

preclusion, when an issue of fact or law is actually

litigated and determined by a final judgment, and the

determination is essential to that judgment, the

determination is conclusive in a subsequent action

between the parties, whether on the same or a differ-

40a

ent claim. 7’reglia v. MacDonald, 430 Mass. 237, 240

(1999); Fireside Motors, Inc. v. Nissan Motor Corp.,

395 Mass. 366, 372 (1985). The purpose of collateral

estoppel is to conserve judicial resources, prevent

unnecessary costs associated with multiple litigation,

and ensure finality of judgments. Treglia v. MacDonald,

430 Mass. at 240. The party asserting collateral

estoppel bears the burden of showing that all pre-

requisites to its application exist. Carrasquillo v.

Commonwealth, 422 Mass. 1014, 1015 (1996); Fireside

Motors, Inc. v. Nissan Motor Corp., 395 Mass. at 373.

A party to a civil action against a former criminal

defendant may invoke collateral estoppel to preclude

the defendant from relitigating any issue actually

decided in the criminal! prosecution. Aetna Cas. &

Sur. Co. v. Niziolek, 395 Mass. «37, 742 (1985). Here,

a careful examination of Bildman’s plea hearing

reveals that he did not specifically admit to the facts

underlying the charges which alleged that his unre-

ported income consisted of home renovations, prosti-

tutes or family vacations paid for by Astra.® Thus,

Bildman’s guilty pleas do not establish as a matter of

law that Astra had cause to terminate him under

® This same conclusion was earlier reached by another judge

of this Court. In a Memorandum of Decision and Order dated

June 15, 1998, Judge Kottmyer denied Bildman’s motion for an

order requiring Astra to provide advance payment of expenses

incurred in defending this suit, noting that “while Bildman’s

admission that he received the services described in the indict-

ment was material to and a necessary predicate for the guilty

pleas, the question whether Astra approved payment of these

expenses was left open by the guilty pleas. Further, whether

Bildman personally obtained a financial profit to which he was

not legally entitled is not established by the guilty plea. Because

the factual basis of the guilty pleas did not encompass allega-

tions of fraud on Astra, indemnification is not barred...”

4la

Paragraph 40(i) of the Employment Agreement for

“the willful commission by the Employee of theft,

embezzlement, fraud or other serious and substantial

crimes against the Company.”

Indeed, although Bildman admits that the expendi-

tures at issue were not explicitly authorized by Astra

U.S.A.’s Board, he has proffered evidence which

creates an issue of disputed fact with respect to

whether he as President was subject to Astra’s Travel

and Expense Policy, whether family vacations and

escort services feil within his broad authority as

President to incur expenses so long as the expenses

served a business purpose and were within budget,

whether use of Astra contractors for personal services

violated Astra policy, whether other Astra executives

also charged personal work by Astra contractors to

the company and whether he either paid various

landscaping and architectural contractors directly or

received their services gratis as a personal favor. See,

e.g., 6/30/01 Bildman Affidavit; 7/30/01 Bildman

Affidavit; Zimmerman Affidavit; Yon Deposition, Vol.

IV, pp. 145-146; Morash Deposition, pp. 136-142.

Astra next contends that it properly terminated

Bildman for cause under Paragraph 4(j)(i1) of the

Employment Agreement for committing numerous

acts which constituted a breach of fiduciary duty to

Astra, thus “materially evidencing bad faith toward

the Company.” First, Astra argues that Bildman’s

violations of the Federal Election Campaign Act, 2

U.S.C. §§ 431 et. seg., (“FECA”) constituted a breach

of fiduciary duty warranting his termination because

such violations exposed the company to potential

liability. It is undisputed that on two occasions

Bildman authorized reimbursement of Astra employees

with Astra funds for campaign contributions to federal

42a

candidates for office, in violation of 2 U.S.C. § 441b(a).

However, the undisputed evidence also shows that

Bildman did not intentionally violate FECA but at

worst was negligent in signing expense reports

without reading each individual item and perhaps in

failing to seck the advice of counsel with respect to

whether campaign contributions could properly be

reimbursed.

Under Massachusetts law, a corporate officer has a

fiduciary duty to act in good faith and with reasonable

intelligence and will not be held responsible for mere

error of judgment or lack of prudence unless it rises

to the level of clear and gross negligence. Allied

Freightways, Inc. v. Cholfin, 325 Mass. 630, 634 (1950);

Murphy v. Hanlon, 322 Mass. 683, 686 (1948); Spiegal

v. Beacon Participations, Inc., 297 Mass. 398, 410-411

(1937). Compare G.L. c. 156B, § 65 (stating that a

corporate officer shall perform his duties with such

care as an ordinarily prudent person in a like position

would use under similar circumstances). Astra has not

cited nor has this court found any case stating that,

as a matter of law, a corporate officer’s unintentional

violation of a statute which exposes the company to

potential liability constitutes a breach of fiduciary

duty. Cf. Miller v. AT&T Co., 507 F.2d 759, 762-763

(3d Cir. 1974) (concluding that shareholder complaint

stated claim for breach of fiduciary duty by alleging

that corporate directors violated FECA by making

$1.5 million contribution to the DNC and that said

contribution constituted corporate waste). No evidence

in the summary judgment record shows that Bildman’s

signing of the expense report without examining each

individual item or his failure to recognize a FECA

violation constitutes gross negligence so as to consti-

tute a breach of fiduciary duty under Massachusetts

law.

43a

Finally, to the extent that Astra invokes Paragraph

4(j)(ii) of the Employment Agreement, that paragraph

defines cause as “acts or omissions materially evi-

dencing bad faith toward the Company.” In the

context of corporate law, bad faith is not simply poor

judgment or mere negligence but rather implies a

dishonest purpose or conscious wrongdoing. Spiegal

v. Beacon Participations, Inc., 297 Mass. at 416. No

evidence in the summary judgment record demon-

strates that Bildman’s violation of FECA involved

bad faith. Accordingly, Astra is not entitled to sum-

mary judgment on the ground that Bildman’s FECA

violations constituted cause for his termination.

Astra also contends that Bildman’s admission that

he secretly taped conversations with other Board

members and Astra officers constitutes a breach of

fiduciary duty which materially evidences bad faith

toward the company, justifying his termination under

Paragraph 4(j)(ii) of the Employment Agreement.

Astra does not cite nor has this Court found any

authority for the proposition that the secret tape

recording by a corporate officer of his conversation

with another corporate officer constitutes as a matter

of law a breach of fiduciary duty. Cf. Peterson v. West,

122 F Supp. 2d 649, 656-657 (W.D. N.C. 2000) (con-

cluding employee’s act of secretly taping a conversation

with his superior, coupled with numerous other acts

of insubordination, constituted legitimate, non-

discriminatory reason for terminating him); Ingram

v. Pre-Paid Legal Serv., Inc., 4 F. Supp.. 2d 1303,

1313 (E.D. Okla. 1998) (concluding employee’s secret

tape recording of conversations with his supervisors

constituted insubordination justifying termination);

Fouraker v. Publix Super Markets, 959 F. Supp. 1504,

1509-1510 (M.D. Fla. 1997) (concluding employee’s act

of tape recording a meeting with his superiors in

44a

violation of supervisor’s orders not to record such

meetings was insubordination justifying his termina-

tion). In addition, the summary judgment record

reveals a disputed issue of fact as to whether the tape

recording of conversations among officers and direc-

tors, without disclosure and permission, was a common

practice at the company. See Bildman Deposition Vol.

I, pp. 163-165. Accordingly, Astra is not entitled to

judgment as a matter of law on the ground that

Bildman’s taping of telephone conversations constitutes

cause for his termination.

Astra next contends that Bildman was insubordinate

in contacting Astra employees during the investigation

in violation of the Directors’ order not to do so and

that this constitutes a breach of fiduciary duty

justifying his termination. Whether refusal to obey

an employer’s order amounts to insubordination jus-

tifying termination depends on the reasonableness

and importance of the order when given, the degree

of discretion entrusted to or required of the employee

in performing his duties, and other circumstances

involved. Mansfield v. Lang, 293 Mass. 386, 395-398

(1936) (concluding that whether treasurer/general

manager's termination for disobeying orders con-

cerning charitable contributions and the use of credit

was justified on ground of insubordination was a

matter for the jury where there was evidence that the

termination was a pretext); Crabtree v. Bay State Felt

Co., 227 Mass. 68, 70-71 (1917) (concluding that court

properly refused to find, as a matter of law, that fac-

tory superintendent’s refusal to appear at board of

director’s mecting after sufficient notice of meeting

justified dismissal where there was evidence that

relations between superintendent and directors

were strained and that the meeting was not ordinary

business conference but a pretext to subject the

45a

superintendent to examination by company counsel).

In this case, given the conflicting evidence as to

whether the Board’s investigation of Bildman was

undertaken objectively, fairly and in good faith, this

Court cannot say as a matter of law that Bildman’s

disobedience to the Board breached his fiduciary duty

and constituted insubordination justifying termination.

Astra also argues that Bildman’s refusal to cooperate

with the Board’s investigation following his suspen-

sion constitutes a breach of fiduciary duty justifying

his termination. Case law in Massachusetts supports

the proposition that, generally, an employee’s refusal

to cooperate with an investigation by the employer of

the employee’s performance of job duties is a proper

ground for termination. See Massachusetts Parole

Bd. v. Civil Service Comm’n, 47 Mass. App. Ct. 760,

765-766, rev. den., 430 Mass: 1111 (1999) (concluding

that public employee was properly terminated for

failing to appear at investigatory interview, despite

his good faith reliance on attorney’s erroneous advice

that he had constitutional right not to appear); Nuzzo

v. Northwest Airlines, Inc., 887 F. Supp. 28, 32-33 (D.

Mass. 1995) (concluding that employee was properly

terminated for refusing to cooperate with employer’s

investigation into whether he was involved in

employee credit card and mail theft); see also McKenzie

v. Brigham & Women’s Hosp., 405 Mass. 432, 437

(1989) (under G.L.c. 151B, hospital employee’s refusal

to cooperate with hospital’s investigation of narcotics

theft was legitimate, non-discriminatory reason for

employee’s termination). Those cases, however, address

the refusal to cooperate of an ordinary employee, as

opposed to a corporation’s highest ranking officer.

Here again, given the conflicting evidence in the

summary judgment record as to whether the inves-

tigation at issue was undertaken objectively, fairly

46a

and in good faith or was a pretext to terminate

Bildman, this Court cannot say as a matter of law

that Bildman’s refusal to cooperate breached his

fiduciary duty and constituted cause for his termina-

tion. See Mansfield v. Lang, 293 Mass. at 395-398;

Crabtree v. Bay State Felt Co., 227 Mass. at 70-71.

Astra next contends that Bildman’s use of Astra

funds to pay personal legal fees, without authoriza-

tion from the Board, constitutes a breach of fiduciary

duty and justifies his termination. Corporate

fiduciaries are bound by their duty of loyalty to

subordinate their personal self-interests to the well

being of the corporation and are prohibited from

using the corporation for their personal benefit in a

manner detrimental to the corporation. Demoulas v.

Demoulas Super Markets, Inc., 424 Mass. 501, 529

(1997); Coggins v. New England Patriots Football

Club, Inc, 397 Mass. 525, 534 (1986); Seder v. Gibbs,

333 Mass. 445, 453 (1956). The present summary

judgment record reveals a disputed factual issue as to

whether charging the personal legal fees at issue to

Astra U.S.A. was a benefit to which Bildman was

entitled as an expatriate or within his authority and

discretion as President and CEO of the company. See,

e.g., 7/30/01 Bildman Affidavit; Tully Deposition, pp.

25-32, 42-43. Accordingly, Astra is not entitled to

judgment as a matter of law on this basis.

Finally, Astra contends it had cause to terminate

Bildman because he breached his fiduciary duty and

evidenced bad faith by failing to disclose to the Board

that he received, without charge, landscaping and

architectural services from companies under contract

with Astra, that he was a principal object of the

Business Week investigation and that he had autho-

rized the settlement of several sexual harassment

47a

claims against him with company funds. Corporate

officers have a continuing fiduciary duty of full and

honest disclosure concerning all matters relevant to

the company’s operation. See Mendelsohn v. Leather

Manuf. Corp., 326 Mass. 226, 232-233 (1950); Geller

v. Allied-Lyons PLC, 42 Mass. App. Ct. 120, 125-126

(1997). However, the summary judgment record

contains material factual disputes concerning the

nature of the contractor arrangements and whether

they should have been disclosed and whether the

sexual harassment claims and their settlement were

in fact disclosed to Astra U.S.A. Board members. See,

e.g., Zimmerman Affidavit; Bildman Deposition

pp. 355-358; Tully Deposition, pp. 125-127; 5/11/98

Bildman Affidavit {7 12, 24-31, 34.

Therefore, Astra is not entitled to judgment as a

matter of law on Count I of Bildman’s counterclaim

on the ground that it properly terminated Bildman

for cause, thus relieving it of any further obligations

to him under the Employment Agreement. Given the

factual disputes concerning whether Bildman was

properly terminated for cause, this Court also denies

Bildman’s cross-motion for summary judgment on

Count I of his counterclaim insofar as it alleges

breach of the Employment Agreement for failure to

pay him earned compensation.

Bildman’s breach of contract counterclaim is also

based on Astra’s refusal to pay his reasonable legal

fees and expenses under Paragraph 9 of the Employ-

ment Agreement, which states: “The Company shall

pay to the Employee all reasonable legal fees and

expenses incurred by him in contesting or disputing

any termination of this Agreement or in seeking to

obtain or enforce any right or benefit provided by this

Agreement.” Astra contends that its termination of

48a

Bildman for cause relieves it of any obligation to him

under this provision. Paragraph 4(f) of the Employ-

ment Agreement provides that “[i]n the event of the

termination of the Employee under this Paragraph,

the Company shall have no further obligation to the

Employee hereunder, except any obligation under

any compensation or benefit plan in which the

Employee is then a participant.” In response, Bildman

emphasizes that Paragraph 9 states that it applies to

“any termination” and argues that interpreting Para-

graph 4(f) to relieve Astra of its obligations in the

event of a termination for cause renders the phrase

“any” meaningless.

The court construes all provisions of a contract

together to make it a rational business instrument

and a workable and harmonious means for effectuating

the parties’ intent. Starr v. Fordham, 420 Mass. 178,

192 (1995); J.A. Sullivan Corp. v. Commonwealth,

397 Mass. 789, 795 (1986). An interpretation which

gives reasonable meaning to all provisions of a con-

tract is preferred to one which renders a term or

provision superfluous. Worcester Mut. Ins. Co. v.

Marnell, 398 Mass. 240, 245 (1986); Associated Credit

Serv. Inc. v. City of Worcester, 33 Mass. App. Ct. 92,

94, rev. den., 413 Mass. 1107 (1992). In addition to

termination by Astra for cause, paragraph 4 of the

Employment Agreement provides for termination by

the employee with or without cause, termination by

Astra without cause, and termination upon change of

control of the company. The term “any” in Paragraph 9

is not superfluous but rather appears to be shorthand

encompassing all these termination situations. With

respect to a termination by Astra for cause, however,

the specific limitation of Paragraph 4(f) controls the

more general language of Paragraph 9. See Lembo v.

Waters, 1 Mass. App. Ct. 227, 233 (1973). Whether

49a

Astra is obligated to pay Bildman fees and expenses

under Paragraph 9 thus depends on whether his

employment was properly terminated for cause

which, as noted, is a material issue of fact to be

resolved at trial. Accordingly, the cross-motions for

summary judgment on Count I of Bildman’s counter-

claim are denied insofar as they concern breach of

Paragraph 9.

II. Cross-Motions for Summary Judgment on Count

II of Astra’s Complaint

The parties have filed cross-motions for summary

judgment on Count II of Astra’s complaint, which

alleges that Bildman breached his fiduciary futy and

duties of good faith and loyalty to Astra. The factual

disputes which precluded entry of summary judg-

ment for Astra on Bildman’s breach of contract claim

necessarily preclude entry of summary judgment on

this count as well.

III. Astra’s Motion for Summary Judgment on

Remainder of Bildman’s Counterclaim and Third

Party Complaint

A. Indemnification Counts

Count II of Bildman’s counterclaim seeks indemni-

fication for costs and expenses incurred in the pre-

sent action, and Count III of the counterclaim seeks

indemnification for costs and expenses incurred by

Bildman in connection with the federal tax _ndict-

ments. Bildman asserts that he is entitled to indem-

nification under Article IX of Astra U.S.A.’s by-laws,

which provides for indemnification of officers “to the

full extent permitted by New York Business Corpora-

50a

tion Law.”* Section 722(a) of the New York Business

Corporation Law provides in relevant part:

A corporation may indemnify any person made,

or threatened to be made, a party to an action or

proceeding (other than one by or in the right of

the corporation to procure a judgment in its

favor), whether civil or criminal .. . by reason of

the fact that he... was a director or officer of the

corporation . .. against judgments, fines, amounts

paid in settlement and reasonable expenses,

including attorneys’ fees actually and necessarily

incurred as a result of such action or proceeding,

or any appeal therein, if such director or officer

acted, in good faith, for a purpose which he

reasonably believed to be in. . . the best interests

of the corporation and, in criminal actions or

proceedings, in addition, had no reasonable cause

to believe that his conduct was unlawful. N.Y.

Bus. Corp. §722(a) (Loislaw.com 2001).

Section 724(a) further provides that “[nJotwith-

standing the failure of a corporation to provide

indemnification . . . indemnification shall be awarded

by a court to the extent authorized under section

722 (Authorization for indemnification of directors

and officers).” N.Y. Bus. Corp. § 724(a) (Loislaw.com

2001).

* Despite the voluminous summary judgment filings, it does

not appear that either party produced a copy of the relevant by-

law in the summary judgment record. However, in an earlicr

decision on the issue of indemnification, this Court (Kottmyer,

J.) referred to Article [IX as the relevant provision. In any event,

the parties do not dispute that New York Business Corporation

Law governs this issue.

5la

Astra contends that as a matter of law § 722 does

not apply to an action in which a corporation sues its

own officer or director for corporate wrongdoing. It is

not clear wider New York case law whether § 722

authorizes indemnification of a corporate officer in a

direct suit by the corporation alleging that the officer

breached his fiduciary and contractual obligations to

the corporation. Although such an action is literally

one “by .. . the corporation to procure a judgment in

its favor” and thus arguably is excluded from § 722,

the term “by or in the night of the corporation” has

been interpreted as a term of art referring to deriva-

tive suits. See Mazur, “Indemnification of Directors

in Actions Brought Directly by the Corporation,” 19 J.

Corp. Law 201, 208-213 (1994) (discussing the legis-

lative history of the N.Y. indemnification statutes).

Because the present suit by Astra against Bildman is

direct and not derivative, Bildman contends that

it falls within § 722(a). This interpretation has

some support in the case law. See, e.g., Sequa Corp.

v. Gelmin, 828 F. Supp. 203, 207 (S.D.N.Y. 1993)

(stating that New York indemnification statutes

apply even where officer is sued by corporation for

breach of fiduciary duty to that corporation); Oantal

Corp. v. Niemuller, 771 F. Supp. 1372, 1373-1374

(S.D.N.Y. 1991) (concluding, in action by corporation

against former officer, he was not entitled to advance

payment of expenses because he failed to meet statu-

tory requirements of § 724 by showing that expenses

sought were reasonable and necessary).

Nonetheless, at least one court has concluded that

§ 722 does not authorize indemnification of a corpo-

rate officer in a direct suit by the corporation alleging

wrongful conduct by the officer in breach of his fidu-

ciary and contractual obligations to the corporation.

See Minami Intl Corp., 1992 WL 58838, * 1 (S.D.N.Y.

52a

1992) (concluding that § 722 does not apply to direct

suit by corporation against officer for breach of con-

tractual obligations to corporation). This is consistent

with the basic principle that indemnification arises

where two persons are subject to a duty to a third

under such circumstances that as between them, one

should perfonn it rather than the other. See Biondi v.

Beekman Hill House Apartment Corp., 692 N.Y.S. 2d

304, 309-310 (N.Y. App. Div. 1999). Given the state of

uncertainty in New York law with respect to this

issue, this Court declines to grant summary judgment

on the ground that § 722 does not apply to direct

actions by a corporation against its former officer.

Even assuming that § 722 does applies, Astra

moves for summary judgment on the ground that as a

matter of law Bildman cannot prevail because indem-

nification under § 722 is available only if the officer

or director “acted, in good faith, for a purpose which

he reasonably believed to be in. . . the best interests

of the corporation and, in criminal actions or proceed-

ings, in addition, had no reasonable cause to believe

that his conduct was unlawful.” N.Y. Bus. Corp.

§ 722(a) (Loislaw.com 2001). Thus, there is no right

to indemnification where the conduct at issue in the

suit is not within the scope of the corporate officer’s

employment, undertaken for the benefit of the cor-

poration, such that the corporation is primarily

responsible for such conduct. Kaufman v. CBS, Inc.,

135 Misc. 2d 64, 65 (N.Y. Civ. Ct. 1987) (denying

indemnification in action against officer by employee

alleging verbal and physical harassment); Profes-

sional Ins. Co. of New York v. Barry, 303 N.Y.S. 2d

556, 559 (N.Y. Sup. 1969) (discussing an earlier

version of the statute). In this case, as noted, the

record reveals a dispute with respect to whether

Bildman in fact breached his fiduciary duty and

53a

engaged in misconduct outside the scope of his

employment. Accordingly, Astra is not entitled to

judgment as a matter of law on Counts II and III of

the counterclaim insofar as they seek indemnification

under New York law.

Bildman also claims a right to indemnification

under Paragraph 8 of the Employment Agreement,

which provides that:

The Company agrees to indemnify the Employee

in his capacity as an officer and member of the

Board of Directors of the Company, all to the

maximum extent permitted under the laws of the

Commonwealth of Massachusetts, from and

against any and all claims, damages, suits, costs,

or liabilities, arising out of or relating to the

performance of his duties and responsibilities as

President and Chief Executive officer. The provi-

sions of this Paragraph 8 shall survive expiration

or termination of this Agreement for any reason.

Chapter 156B, section 67, which permits but does not

require indemnification for corporate directors, offic-

ers and employees, provides in relevant part:

No indemnification shall be provided for any

person with respect to any matter as to which he

shall have been adjudicated in any proceeding

not to have acted in good faith in the reasonable

belief that his action was in the best interest of

the corporation ... G.L. c. 156B, § 67 (2000).

The record reveals a factual dispute with respect to

whether Bildman acted in good faith or breached his

fiduciary duty and engaged in misconduct outside the

scope of his employment. See, e.g., Boston Children’s

Heart v. Nadal-Ginerd, 73 F.3d 429, 436438 (1st Cir.

1996) (cencluding that denial of corporate officer’s

54a

claim for indemnification was proper where trial

court found he was disloyal and breached his fidu-

ciary duties to corporation). Cf. Demmoulas v. Demoulas

Super Markets, Inc., 424 Mass. 501, 561-562 (1997)

(finding corporate officer entitled to indemnification

under by-laws where court failed to make an express

finding that he acted in bad faith); Dynan v. Fritz,

400 Mass. 230, 245-246 (1987) (finding officers entitled

to indemnification under corporate by-laws where

court did not find that they acted in bad faith).

Accordingly, Astra is not entitled to judgment as a

matter of law on Counts II and III of the counter-

claim insofar as they seek indemnification under

Massachusetts law.

B. Defamation Counts

Astra moves for summary judgment on Counts IV,

VI and VII of the counterclaim on the ground that

Bildman has no reasonable expectation of demon-

strating libel at trial. Count IV alleges that Astra

made various defamatory statements with malice,

and Count VI alleges that Astra made various defa-

matory statements negligently. Count VII alleges

that certain statements by Astra constitute libel per

se Astra contends that the statements identified by

Bildman are either non-defamato

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