18-2804
Stone Key v. Monster

                        UNITED STATES COURT OF APPEALS
                            FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
11th day of October, two thousand nineteen.

PRESENT:    PETER W. HALL,
            DEBRA ANN LIVINGSTON,
                        Circuit Judges,
            CLAIRE R. KELLY,
                        Judge.*
_____________________________________

Stone Key Partners LLC, Stone Key Securities LLC,

                       Plaintiffs-Appellants,

                       v.                                           No. 18-2804-cv


Monster Worldwide, Inc.,

                       Defendant-Appellee.

_____________________________________

For Appellants:                                 CHARLES A. GILMAN, Cahill Gordon & Reindel LLP,
                                                New York, New York (Thomas D. Goldberg, Day
                                                Pitney LLP, Stamford, Connecticut and Howard
                                                Fetner, Day Pitney LLP, New Haven, Connecticut,
                                                on the brief)

*Judge Claire R. Kelly of the United States Court of International Trade, Sitting by Designation.
For Appellee:                                  RYAN K. WALSH, Jones Day, Atlanta, Georgia
                                               (Harold K. Gordon, Jones Day, New York, New
                                               York, on the brief)

       Appeal from a judgment of the United States District Court for the Southern District of

New York (Furman, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       Plaintiffs-Appellants Stone Key Partners LLC and Stone Key Securities LLC (collectively,

“Stone Key”) appeal the August 24, 2018 judgment and accompanying August 10, 2018 opinion

and order of the district court granting judgment in favor of Defendant-Appellee Monster

Worldwide, Inc. (“Monster”) on each of Stone Key’s three breach of contract claims following a

three-day bench trial.   Stone Key also challenges the amount of reimbursement calculated by the

district court for its out-of-pocket expenses incurred under the April 20, 2012 agreement (“the

Engagement Letter”) at issue in this litigation. Stone Key, along with Bank of America Merrill

Lynch, served as a co-financial advisor to Monster in connection with a strategic review focused

principally on securing a potential acquiror for the company.         The Engagement Letter under

which the parties memorialized their agreement provided that Stone Key was entitled to receive

compensation from Monster in the event of certain qualifying transactions—including, as relevant

here, a “Sale Transaction” or a “Partial Sale Transaction.” We assume the parties’ familiarity

with the underlying facts, the issues, and the procedural history of the case.   For many of the same

reasons articulated by the district court, we affirm the grant of judgment in favor of Monster on all

three breach of contract claims.   We also affirm the award of reimbursement to Stone Key in the

amount of $37,267.50, plus prejudgment interest.



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       “In order to recover from a defendant for breach of contract, a plaintiff must prove, by a

preponderance of the evidence, (1) the existence of a contract between itself and that defendant;

(2) performance of the plaintiff’s obligations under the contract; (3) breach of the contract by that

defendant; and (4) damages to the plaintiff caused by that defendant’s breach.” Diesel Props S.r.l.

v. Greystone Bus. Credit II LLC, 

, 52 (2d Cir. 2011) (applying New York law). At

issue here is whether Monster breached the Engagement Letter by failing to compensate Stone

Key for certain transactions that Stone Key maintains fall within its scope. The district court held

that Stone Key was precluded from recovering on two of its three claims (for the “JobKorea II”

and “Randstad” transactions) because those transactions occurred beyond the conclusion of the

Engagement Letter’s one-year tail period. See Stone Key Partners LLC v. Monster Worldwide,

Inc., 

(S.D.N.Y. 2018). The district court based its ruling on its finding that

Stone Key’s engagement ended on August 1, 2013, following the parties’ failure to secure a

potential acquiror for Monster as contemplated by the Engagement Letter and in light of their

mutual understanding that the strategic review had, for that reason, reached its conclusion. See

       As a threshold matter, Stone Key asserts that the Engagement Letter unambiguously

required written notice of termination and that, in the absence of either party having terminated

the engagement via writing, the district court erred in looking to extrinsic evidence to ascertain the

date on which Stone Key’s engagement was completed. “When reviewing a judgment following

a bench trial in the district court, we review the court’s findings of fact for clear error and its

conclusions of law de novo.”     Merck Eprova AG v. Gnosis S.p.A., 

, 255 (2d Cir.

2014) (quoting Tiffany (NJ) Inc. v. eBay Inc., 

, 96 (2d Cir. 2010) (internal quotations



                                                  3
omitted)).    “Under New York law, ‘if a contract is straightforward and unambiguous, its

interpretation presents a question of law for the court to be made without resort to extrinsic

evidence.’”   Spinelli v. Nat’l Football League, 

, 200 (2d Cir. 2018) (quoting

Postlewaite v. McGraw-Hill, Inc., 

, 67 (2d Cir. 2005)). “But if ‘intent of the parties

cannot be ascertained from the face of their agreement,’ the contract is ambiguous and its

interpretation presents a question of fact.” 

411 F.3d at 67 (alterations

omitted)).

       We conclude that the Engagement Letter’s termination provision is ambiguous, as it fails

to identify an exclusive means for the engagement’s conclusion.     While it establishes that Stone

Key’s “engagement hereunder may be terminated at any time by either Stone Key or [Monster]

for any or no reason upon written notice thereof to the other party without liability or continuing

obligation,” App. 1396 § 6, it does not state that it “must” be terminated in writing. See, e.g.,

New York State Elec. & Gas Corp. v. Aasen, 

, 225 (3rd Dep’t 1990) (“The word

‘may’ provides for a permissive and not a mandatory meaning within the context of the . . .

agreement”). Nor does the Engagement Letter as a whole establish unambiguously that Stone

Key’s engagement is ongoing in the absence of such written termination.         Cf., e.g., Peter J.

Solomon Co., L.P. v. ADC Prod. (UK) Ltd., No. 14-cv-4086, 

, at *2–4 (S.D.N.Y.

Mar. 30, 2016) (rejecting proposition that agreement terminated automatically or that the parties

rescinded their contract by abandonment where the agreement provided that the engagement term

“shall extend from the date hereof and shall continue thereafter until (a) three months after such

time as the Company or PJSC shall have notified the other party in writing of the termination of

this agreement or” in the event of a notification of breach (emphasis added)). Given the terms of



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the Engagement Letter, the cases on which Stone Key relies for the proposition that the

engagement could only be terminated by writing, cf., e.g., id.; Chem. Bank v. Sepler, 

, 293–94 (1983) (holding that change in parties’ relationship did not terminate guarantee

contract, which provided that it “shall remain in full force and effective irrespective of any

interruptions in . . . business relations” but could be terminated via writing), are inapposite.

Moreover, as the district court found, the Indemnification Provisions incorporated by reference in

the Engagement Letter indicate that they shall survive “[t]he termination or modification of the

Agreement, or the termination, modification or completion of the engagement of Stone Key

thereunder,” App. 1404, thus suggesting additional ways that the agreement might conclude.

       Because the Engagement Letter did not condition termination of the agreement on written

notice, the district court properly looked to extrinsic evidence to determine the parties’ intent.

The district court was entitled to look to “the parties’ apparent intention, what would be

commercially reasonable, and the parties’ interpretation of the contract in practice, prior to

litigation.” In re MPM Silicones, LLC, 

, 796–97 (2d Cir. 2017) (internal quotation

marks and citations omitted). Its determination that these factors established that the agreement

was complete by August 1, 2013, when Monster announced its stock repurchase program

following the parties’ failure to procure an acquiror, was not clearly erroneous. The district court

cited ample evidence in support of its findings of fact while neglecting to credit the contrary

testimony of Stone Key witness Michael Urfirer, which the court found self-serving. See Stone

.         Because “substantial evidence” supports Judge Furman’s

conclusions, thus invoking a “strong presumption in favor of [his] findings of fact,” and the record

does not otherwise support a “definite and firm conviction that a mistake has been committed,”



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Bessemer Trust Co., N.A. v. Branin, 

, 85 (2d Cir. 2010) (internal quotation marks and

citation omitted), we decline to disturb these factual findings.

        Stone Key also challenges the district court’s ruling that Stone Key was not entitled to

recover a fee for the December 2013 sale of 49.99% of Monster’s interest in JobKorea, its Korean

subsidiary, to H&Q Korea (“H&Q”), a private equity fund (“JobKorea I”). While the transaction

fell within the engagement’s one-year “tail period” as calculated by the district court, the court

held that JobKorea I did not implicate “the sale of a material portion of the assets or operations of

[Monster] and its subsidiaries taken as a whole” so as to constitute a Partial Sale Transaction under

the agreement. See App. 1391 § 3(c); Stone 

–34.           In the alternative,

the district court held that the Partial Sale Transaction provision of the Engagement Letter was an

unenforceable agreement. 

       We review these mixed questions of law and fact de

novo.   See Beck Chevrolet Co. v. Gen. Motors LLC, 

, 672 (2d Cir 2015).

        Because we agree that the sale of 49.99% of Monster’s interest in JobKorea did not

constitute a material portion of Monster’s assets or operations, we affirm the district court’s

holding that JobKorea I did not qualify as a Partial Sale Transaction, and thus we decline to

consider whether the compensation provision itself was enforceable. In concluding that JobKorea

I did not satisfy the materiality threshold, the district court relied upon the fact that: (1) following

the consummation of JobKorea I, Monster retained majority control over the subsidiary and thus

did not relinquish a material portion of its operations; and (2) Monster’s 49.99% stake in JobKorea

constituted less than 4% of Monster’s total assets at the time of the transaction. Stone 

–34. As to the first issue, while Stone Key advocates for a broader definition

of “operations” that accounts for other qualitative factors such as profitability and market response,



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it fails to ground these arguments in any specific understandings evidenced by the parties’

agreement. And to the extent that it attempts to rely upon the material control that H&Q allegedly

acquired over JobKorea as a result of the transaction, citing limitations embodied in the purchase

agreement between Monster and H&Q, these restrictions ultimately have little bearing on the

question of whether the sale involved a material portion of Monster’s operations and that of “its

subsidiaries taken as a whole,” as defined in the Engagement Letter. App. 1391 § 3(c).

       For similar reasons, we decline to overturn the district court’s holding that the sale of 3.7%

of Monster’s assets as measured by their book value was not “material,” citing the oft-used 5%

rubric for “quantitative materiality” in the context of securities fraud case law. Stone Key, 333 F.

Supp. 3d at 333–34 (internal quotation marks omitted). Stone Key argues in favor of other

metrics, such as fair market value, to better approximate the value of Monster’s total assets as

compared to its 49.99% interest in JobKorea. But without evidence that the parties’ expressly

contemplated some other method for assessing the value of Monster’s assets or their materiality,

we will not disturb the district court’s findings. Nor do we find compelling Stone Key’s argument

that the district court’s reliance on book value was only proper if the court “compared 100% of the

book value of JobKorea’s assets . . . to the book value of Monster’s total assets,” Appellant’s Br.

40, when the transaction did not involve the transfer of 100% of Monster’s interest in JobKorea.

       Finally, Stone Key argues that the district court miscalculated the reimbursement it is owed

for out-of-pocket expenses under the agreement by failing to include in its calculation certain

expenses that Stone Key incurred before the Engagement Letter was executed. While it appears

undisputed that Stone Key began working on the strategic review upon which the Engagement

Letter was predicated before its execution, the district court correctly found that the agreement



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unambiguously limited the entitlement to reimbursement for expenses incurred “in connection

with Stone Key’s rendering its services under this Agreement.” App. 1395 § 5. The parties’

failure to provide that Stone Key was entitled to reimbursement for expenses that predated the

agreement is thus fatal to its claim. See, e.g., Krumme v. WestPoint Stevens Inc., 

,

139 (2d Cir. 2000) (“Under New York law, . . . a court must enforce th[e] plain meaning, rather

than rewrite an unambiguous agreement.” (internal quotation marks and alterations omitted)).

       We have considered Stone Key’s remaining arguments and find them to be without merit.

We hereby AFFIRM the judgment and accompanying opinion and order of the district court.



                                                   FOR THE COURT:

                                                   Catherine O’Hagan Wolfe, Clerk of Court




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