The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge
Defendants Insead and Insead Online (collectively, "Insead") have
moved for summary judgment against plaintiff Economist's Advocate, LLC
("EA"), pursuant to Fed.R.Civ.P. 56. Additionally, EA has moved for
summary judgment against Insead and defendant Cognitive Arts Corp.
("Cognitive Arts") on the First and Second Causes of Action in the
complaint or, in the alternative, for summary judgment against Insead on
the Third or Fourth Cause of Action. For the reasons set forth below,
Insead's summary judgment motion is denied, as is EA's summary judgment
motion against Insead. EA's summary judgment motion against Cognitive
Arts was previously granted, and a judgment entered. That judgment is
EA commenced this action on October 29, 2001. The instant motions were
marked fully submitted on November 13, 2003. Cognitive Arts submitted no
opposition to EA's motion and EA's motion was granted with regards to
Cognitive Arts on February 2, 2004. The Facts
The facts are set forth based upon the Local Rule 56.1 statements of EA
and Insead and supporting declarations and are undisputed except as noted
Insead, a business school based in Fountainebleau, France, owns 100% of
Insead Online, an entity which develops and sells educational content via
the Internet. Gabriel Hawawini ("Hawawini") has been Dean of Insead since
September 2000. Soumitra Dutta ("Dutta") was Dean of Technology at Insead
from September 1999 through August 2002 and is currently the Dean of
Executive Education at Insead. Jane Sommers-Kelly ("Sommers-Kelly") has
been the Director of Insead Online since May 2000 and had previously been
Director of Development at Insead.
EA is a limited liability corporation organized under the laws of the
State of Delaware with its principal place of business in Ponca City,
Oklahoma. EA has been engaged in executive training, including executive
training delivered over the Internet, and business consulting, and it has
used the enterprise trade name QED Learning.
Matthew Krepps ("Krepps") is the President of EA. He was an assistant
professor at Insead from January 1998 to May 2001. Cognitive Arts is an Illinois corporation with a principal place of
business in New York, New York at the time this action was filed.
Cognitive Arts is a for-profit commercial eLearning developer which
implements corporate training and learning systems that are delivered via
computer in either CD or web format. Edward Reiner ("Reiner") joined
Cognitive Arts in January 2001 as Executive Vice President of Business
Development and remained in that position until December 2001.
According to EA, Insead and EA worked together on the development of
online course materials from winter 1999 through April 2001. Insead
acknowledges that EA did work in connection with the development of
course materials, but claims that efforts were not intended to benefit
Insead and that Krepps intended to market courses to other universities.
The parties dispute as to whether or not Krepps and Insead entered into
Krepps engaged in business conversations with representatives of
Cognitive Arts as early as January 2000. EA claims Krepps entered into these discussions in fulfillment of EA's agreement
in principle to develop and market online courses with Insead. Insead
denies the existence of such an agreement and claims that Krepps sought
to identify a development partner for his own benefit, and not at the
request of Insead.
In September 2000, Krepps entered into a Joint Venture Agreement with
Cognitive Arts. This agreement states that EA and Cognitive Arts "will
form a joint venture (JV) for the purpose of developing and marketing
courses and modules for courses . . . that will be branded by Insead or
Insead Executive Education (IU), or other premium providers of management
education. The primary markets for these Courses will be students
attending IU Executive Education programs, other European Universities
and Management Schools, and corporations both in Europe and in the United
The Joint Venture Agreement contained an exclusivity clause prohibiting
Cognitive Arts from developing courses outside the agreement for any of
the institutions introduced to the joint venture, including Insead. This
restriction would function for the term of the joint venture plus two
The agreement further allocated costs and revenues from the joint
venture between Cognitive Arts and EA. It states:
CA [Cognitive Arts] and EA will split evenly all
net expense income for each of the Courses
developed by the joint venture, with 50% of net income being
allocated to each party. Each party, in
consideration for its 50% share of net income,
shall be required to furnish to the joint venture
half of the total costs allocable to the running
of the JV operations.
Additionally, the Joint Venture Agreement laid out the terms for
dissolution of the joint venture and the mechanism for Cognitive Arts and
EA to buy out each other's interests.
The parties dispute as to when Insead became aware of the Joint Venture
Agreement. EA claims that Krepps introduced Cognitive Arts to Insead as
EA's development partner less than 24 hours after the agreement was
During the fall of 2000, the joint venture developed several elementary
business courses for Insead.*fn2
In November 2000, Insead informed Krepps that its faculty members
should not enter into an agreement at odds with the interests of the
school, such as the Joint Venture Agreement. On November 21, 2000, Krepps
sent an email to Hawawini, Dean of Insead, proposing a solution. He
offered to separate from the joint venture in return for a mutually
agreeable fee from Cognitive Arts. Hawawini agreed to Krepps' solution
and asked Krepps to cancel the contract barring direct contact between Cognitive Arts
and Insead as soon as possible.
From December 2000 through April 2001, Krepps attempted to find a third
party to purchase his interest in the joint venture without success.
Krepps and Cognitive Arts then began discussing the terms of a
Termination Agreement, which would provide for EA's divestiture from the
joint venture. The parties dispute Insead's involvement in these
discussions, and Krepps claims, while Insead denies, that Insead agreed
to compensate EA for its investment. The parties agree, however, that
Krepps was informed that Insead would not be negotiating with him and
that he should negotiate with Cognitive Arts. After early May 2001,
Insead did not communicate directly with EA or Krepps.
In May 2001, Krepps resigned from his teaching post at Insead.
On May 11, 2001, Reiner from Cognitive Arts sent Krepps the first draft
of a Termination Agreement for his review. Cognitive Arts' cover letter
states that the draft Termination Agreement was sent on behalf of the
Board of Cognitive Arts and Insead. Drafts of the Termination Agreement
were exchanged between Krepps and Cognitive Arts from May to September
2001. Insead was included as a party to drafts of the Termination
Agreement. May and June drafts of the Termination Agreement provided for up-front
and royalty payments by Cognitive Arts to Krepps. Then, an August 8, 2001
version of the Termination Agreement ("Version Two") had both Cognitive
Arts and Insead listed in the payment section. On August 10, 2001, Krepps
signed Version Two, but Cognitive Arts and Insead did not. Reiner first
represented to Krepps that the parties were in agreement and then claimed
that only a few insubstantial changes needed to be made.
A subsequent version of the Termination Agreement ("Version Three")
included Insead in the payment section, but made payment contingent upon
Cognitive Arts entering into a development agreement with McGraw-Hill.
The parties dispute whether EA was sent this version of the agreement on
August 23 or August 26, 2001 and whether EA received an August 23 cover
letter, that indicated that Version Three was sent to Insead as the final
version of the agreement. Insead reviewed the terms of Version Three and
assented to it by signing and faxing the signature page to Cognitive Arts
on September 17, 2001. EA claims that Insead placed no restrictions on
what Reiner was permitted to do with the page that contained Insead's
signature. Neither Krepps nor Cognitive Arts signed Version Three.
From September 1 to September 4, 2003, Krepps and Reiner exchanged new
drafts of the agreement. The parties disagree as to whether Insead was
aware of these new drafts. Version Four, completed on September 4, 2003, made payment to Krepps
unconditionally due on September 17, 2001. Insead claims that it never
received a copy of Version Four or knew of its existence. By September
17, 2001, Krepps and Reiner both signed Version Four.
Reiner advised Krepps that he would be sending over Insead's signature
page for Version Four. Krepps requested that he send the entire agreement
Insead had agreed to, along with Insead's signature page. Reiner sent
Krepps a page containing Insead's signature, bearing a footer identifying
it as the signature page for Version Three, and attached it to Version
Four of the agreement, bearing a footer identifying it as Version Four.
Insead claims Cognitive Arts ...