Second Circuit Affirms Dismissal of Claims Against FCM

Paul, Weiss secured a victory before the Second Circuit on behalf of FCM, LLC and Mitchell Habib, FCM’s CEO, ending a long-running dispute related to a consulting agreement. FCM, LLC, a consulting firm, and its CEO were sued by Ortho-Clinical Diagnostics, a healthcare company that had hired FCM as an information technology consultant after Ortho was spun out of Johnson & Johnson. In early 2015, after technical difficulties arose with the project, the parties negotiated a settlement that included a release of “known claims” and a promise to provide “Transition Services.” A few months after the settlement, Ortho brought suit, alleging breach of contract, fraud, negligent misrepresentation, unjust enrichment, tortious interference with prospective economic advantage and breach of a covenant of good faith and fair dealing.

In two opinions, Judge Naomi Buchwald of the Southern District of New York dismissed each of Ortho’s claims, either pursuant to the settlement release or for failure to state a claim. Ortho appealed two of the district court’s rulings: (1) that the claim for breach of the original consulting agreement was released by the settlement and (2) that FCM did not breach the settlement agreement’s “Transition Services” provision. The Second Circuit’s opinion went even further than the district court’s, holding that FCM had not breached the consulting agreement and that Ortho’s interpretation of the settlement was “unreasonable” and “nonsensical.”

The Paul, Weiss team included litigation partner Aidan Synnott, who argued the appeal, and counsel Daniel Crane.