ECLI:NL:RBAMS:2019:5197

Uitspraak

judgment

AMSTERDAM DISTRICT COURT

Netherlands Commercial Court

NCC District Court – Court in Summary Proceedings

Case number: NCC 19/013 (C/13/668333)

Judgment

4 July 2019

Claimant, and defendant in the counterclaim:

SYMPHONY SOLUTIONS B.V.,

Amstelveen (The Netherlands),

represented by K.I. Brink, B.L.P. van Reeken and R. de Kleijn, lawyers

Defendants and claimants in the counterclaim:

1. OPENBET LIMITED,

London (United Kingdom),

2. SCIENTIFIC GAMES CORPORATION,

Carson City, Delaware (United States of America),

both represented by M.M. Huijzen, lawyer

The claimant (and defendant in the counterclaim) is referred to below as Symphony.

Defendants (and claimants in the counterclaim) are referred to below as OpenBet and SGC respectively. The term “lawyer” above has the meaning as defined in article 3.1.1 Netherlands Commercial Court Rules (NCCR).

1.Procedural history

The hearing was held on 3 July 2019.

Symphony stated its claim as detailed in its writ of summons with exhibits.

OpenBet and SGC contested the claim and presented a counterclaim and exhibits.

All parties spoke at the hearing and provided pleading notes to the judge.

After extended debate, the parties requested that judgment be given.

The following individuals attended the hearing:

- B.L.P. van Reeken and K.I. Brink, lawyers, on behalf of Symphony,

- [CEO] , CEO and shareholder of Symphony,

- M.M. Huijzen and J.E. Polet, lawyers, on behalf of OpenBet and SGC,

- [lawyer] , general counsel of OpenBet.

Because of the urgency of the matter, a brief judgment was given on 4 July 2019. The following is the full judgment issued on 18 July 2019.

2.Facts

2.1.

Symphony provides IT services. Symphony staffs teams of contractors (developers) in Eastern Europe to develop software for its customers.

2.2.

OpenBet provides online gambling services. OpenBet is a subsidiary of SGC and part of Scientific Gaming Digital, a division of Scientific Gaming Group.

2.3.

On 17 December 2017, Symphony and OpenBet entered into a Master Service Agreement (MSA), the relevant provisions of which are set out below:

“(…)

1 DEFINITIONS AND INTERPRETATIONS

(…)

“
Assigned Staff Member(s)” Members of
Symphonypersonnel assigned to carry out services for the
Clientunder this Agreement, including Key Personnel.

(...)

“
Key Personnel” are members of
Symphonypersonnel whose duties and expertise are considered to be essential to the good performance of this Agreement.

(…)

“
Services” the services to be delivered by Symphony to Client under this Agreement;

“
Statement of Work” A part of this Agreement specifying services to be performed for
Clientin accordance with the procedures and conditions specified therein.

(…)

3.2

Termination for Cause

3.2.1

Clientmay terminate this Agreement or any Statement of Work with immediate effect and require that the terms of Schedule 5 shall apply by giving notice in writing to
Symphonyif:

(…)

3.2.2

Subject to Clause 3.2.1,
Clientmay terminate this Agreement or any Statement of Work by giving notice to
Symphonyin the event that
Symphonycommits a material breach of this Agreement, except that such termination shall not be effective unless and until the following has occurred:

(a)
Clienthas informed
Symphonyin writing that a material breach of this Agreement has occurred (material breach shall include, without limitation, the failure to perform according to the terms of a Statement of Work); and

(b) A period of 30 days from the delivery of notice informing
Symphonyof the breach has passed and the breach has not been remedied to the
Client’ssatisfaction.

(…)

3.2.3

Symphonymay terminate this Agreement or any Statement of Work under this Agreement by giving notice to
Clientin the event that
Clientfails to:

(a) Make due payment for work performed by
Symphonyhereunder; or

(…)

7.4

Non recruitment of personnel / non-solicitation

(…)

7.4.2

Other than as described in Schedule 5,
Clientshall not solicit or procure for employment any employees of
Symphonyor its Representatives during the Term and for twelve (12) months thereafter.

(…)

8.6

Jurisdiction, Venue, Laws and Fees.

This Agreement shall be governed by and construed and enforced in accordance with the substantive laws of The Netherlands, without regard to its principles of conflicts of laws. The Parties agree to submit any and all conflicts and/or claims arising from this Agreement to the exclusive jurisdiction of the Amsterdam Court in Amsterdam, the Netherlands. (…)

(…)

8.1

Survival

The terms of Clauses 7.3, 7.4 and 8 hereof shall survive any termination or expiration of this Agreement, (…)

(…)

Schedule 1

Statement of Work

Symphony shall provide the Services to Client via Time and Materials Assignments unless otherwise agreed.

Schedule 2

(…)

Schedule 3

Recruitment Process & Client Personnel

Recruitment Process

• Symphony will ensure that all potential Assigned Staff Members go through at least the following recruitment process

(…)

• Technical Interview (tech matrixes; 2 objective unbiased feedbacks)

(…)

•
Clientreserves the right to interview any potential Assigned Staff Member that has passed
Symphonytests, but for the avoidance of doubt, the intention is that
Symphonywill eventually be able to recruit "juniors" without
Clientintervention

(…)

Schedule 4

Costs and Fees

As soon as reasonably practical following the start of each Quarter, Symphony shall submit a cost statement for the previous Quarter to the
Clientstating the following:

• All direct costs actually incurred by Symphony in the provision of the Services (such as, but not limited to, external recruiting costs, office rental, labour costs, and
Clientspecific software and hardware); and

• The indirect costs actually incurred by Symphony in the provision of the Services, prorated according to the total number of Assigned Staff Members

The
Clientshall pay
Symphonyan hourly rate based on Symphony making an Earnings Before Interest and Taxes (EBIT) margin of 15%.

At the end of each Quarter:

• any fees charged by
Symphonyin excess ofan EBIT margin of 15% in that Quarter will be returned to
Clientvia credit note within 30 days of the start of the following Quarter; and

• any fees charged by
Symphonybelowan EBIT margin of 15% in that Quarter will be paid to
Symphonywithin 30 days of the start of the following Quarter.

(…)

The
Clientretains the right to audit each cost statement and
Symphonyshall provide as much detail and supporting information as the
Clientrequires.

Schedule 5

Exit Plan

General Obligation

On termination of this Agreement in accordance with Clause 3.3,
Symphonywill provide all reasonable assistance to
Clientto facilitate the orderly transfer of the Services either back to
Clientor to enable another party chosen by
Client(a “
New Service Provider”) to take over the provision of all or part of the Services. The remaining provisions of this Schedule will not prejudice or restrict the generality of this obligation.

(…)”.

2.4.

On 26 February 2019, OpenBet’s lawyers wrote the following to Symphony:

“(…)

Notice of default OpenBet

This letter should be considered a
notice of default(as referred to in article 3.2.2(a) MSA) in relation to the following material breaches by Symphony of its obligations vis-à-vis OpenBet:

1.
Recruitment: Symphony’s recruiters have significantly underperformed, as nine recruiters have, even with the support of OpenBet and external recruiters, hired only 41 technical staff members in the first twelve months, whilst:

(A) as Symphony was well aware, OpenBet’s goal was to hire at least 100 Sportsbook team members as well as 25 OPS Portal team members;

(B) Symphony informed OpenBet in January 2018 that, given its then current "
success rate”, it should be able to hire seven technical staff members per week; and

(C) (at most) two (instead of nine) recruiters should have been able to hire 41 technical staff members in a year. In this respect I note that the recruiters employed by / for the benefit of the group of companies to which OpenBet belongs recruit between 22 to 94 persons per year per recruiter.

2.
Hiring staff members without OpenBet’s approval: Symphony has, in breach of its obligations vis-à-vis OpenBet and more specifically in violation of the requirements set out at Schedule 3 of the MSA, hired recruiters and office administration staff members without OpenBet’s approval (and without regard to the prescribed process detailed in said schedule). In that respect, I note that also recruiters and office administration staff members qualify as "Assigned Staff Members" as mentioned in Schedule 3, given that all the work they perform and all the services they deliver are (or at least: should be) solely directed at serving OpenBet’s interests. And should the obligation to obtain OpenBet’s approval not follow from the text of the MSA, then it in any case follows from Symphony’s obligation to exercise the care of a good contractor (article 7:401 Dutch Civil Code) and to act in accordance with the requirements of reasonableness and fairness (article 6:2 Dutch Civil Code), given that:

(A) (as mentioned above:) all the work performed and all the services delivered by the recruiters and office administration staff members are (or at least: should be) solely directed at serving OpenBet's interests;

(B) all costs relating to (the hiring of) the recruiters and office administration staff members are borne by OpenBet; and

(C) on the basis of the fee structure set out in Schedule 4 MSA, Symphony profits from the employment of new recruiters and office administration staff members and thus (also for this reason alone) a correction mechanism (at least also aimed at preventing any potential misuse of an otherwise complete discretionary power of Symphony to employ as many persons as it desires) must be in place.

Furthermore, OpenBet’s view is that either (i) (as explained above:) the recruiters and office administration staff members qualify as “
Assigned Staff Members", in which case the appointment by Symphony requires OpenBet’s approval, which was not given, or (ii) (as Symphony alleges) the recruiters and office administration staff members are not "
Assigned Staff Members”, but then there also would not be an obligation for OpenBet to pay any amount to Symphony in relation to the employment of said staff members, in which case it would have to be concluded that OpenBet has been overcharged in this respect.

3.
Ramping down recruiters and office administration staff members: By its letter of 12 February 2019 OpenBet provided formal notice of its requirement to ramp down the staff members who purely perform a recruitment role and staff members that purely perform an office administration role to one (1) staff member per each of those two roles.

From [CEO] s email of 17 February 2019 OpenBet concludes that Symphony refuses to comply with said ramp down request, as Symphony apparently (and wrongfully) is of the opinion that it needs “
no approval to hire, nor remove overhead from the Krakow office”. Symphony’s position is contrary to articles 3.4 and 7.1.13 MSA, given that also the recruiters and office administration staff members qualify as "
Assigned Staff Members". Furthermore, even if the recruiters and office administration staff members would not qualify as "
Assigned Staff Members”, Symphony is still obliged to comply with OpenBet’s ramp down requests. In this regard I refer to the observations under (2) above, which also apply,
mutatis mutandis, here.

Furthermore, Symphony has already complied with a number of previous requests from OpenBet to ramp down office administration staff members, which further demonstrates that Symphony apparently shares OpenBet’s view on Symphony’s obligations under the MSA.

4.
Overcharging: OpenBet has been overcharged by Symphony for
at leastthe following amounts, totalling €173,734:

(A)
Recruitment and ERM: €121,636

The following amounts, totalling €182,454.76, are mentioned in the P&L statement for the period January - September 2018 in relation to recruitment and ERM:

(1) Symphony external recruitment cost: €5,180

(2) Agencies external recruitment cost: €78,837.76

(3) ERM: €22,206

(4) Recruiting (internal): €76,231

Symphony should have been able to deliver the results it delivered with (at most) two recruiters and one ERM staff member (instead of nine full time staff members) and with reduced external costs. Therefore, OpenBet assesses the amount for which it has been overcharged in respect of recruitment and ERM at (6/9 x €182,454.76=) 121,636.

(B)
Marketing: €52,098

The P&L statement for the period January - September 2018 contains a total amount of €52,098 for marketing related expenses. However, these expenses have not resulted in any proven added value.

(…)”.

2.5.

On 14 June 2019, OpenBet’s lawyers wrote the following to Symphony:

“(…)

Given that Symphony has thus not remedied its material breaches as described in my previous letters within 30 days,
I hereby, on behalf of OpenBet, terminate the MSA in accordance with article 3.2.2 with immediate effect.

OpenBet hereby also invokes article 3.3 MSA and thus requires that the terms of Schedule 5 MSA shall apply.More specifically, OpenBet requires that Symphony will:

1 provide all reasonable assistance to OpenBet to facilitate the orderly transfer of the Services, more specifically (the services rendered by) the following persons, to OpenBet:

[Developer] QA Test Analyst

[Developer] Front End Developer

[Developer] QA Engineer

[Developer] Software Engineer L2

[Developer] Business Analyst

[Developer] QA Analyst

[Developer] QA Automation Engineer

[Developer] Software Engineer L2

[Developer] Business Analyst

[Developer] Senior Software Engineer L3

[Developer] Business Analyst

[Developer] Senior Software Engineer L3

[Developer] Software Engineer L2

[Developer] Senior Software Engineer L3

[Developer] QA Automation Engineer

[Developer] Senior Software Engineer L4

[Developer] Senior Software Engineer L3

[Developer] Project Manager L3

[Developer] Development Manager

[Developer] Principal Software Engineer

[Developer] Product Owner

[Developer] Principal Software Engineer

[Developer] QA Lead

[Developer] Senior Software Engineer L3

[Developer] Remote worker

[Developer] Business Analyst".

The court will hereafter refer to the 33 persons named in this letter as the 33 Developers.

3.The claim and counterclaim

Claim

3.1.

Symphony reduced its claim at the hearing on 3 July 2019.

Symphony now requests the NCC CSP to give a judgment for interim measures, enforceable notwithstanding appeal, to:

Principal claim

3.1.1.

prohibit each of OpenBet and SGC, with immediate effect after service of the NCC CSP judgment, to solicit, procure for employment and/or give instructions to any employees of Symphony or persons carrying out work for Symphony, including the persons mentioned in the letter of OpenBet to Symphony dated 14 June 2019, other than through Symphony or with Symphony's prior written consent;

3.1.2.

order OpenBet and SGC to confirm in writing within twenty-four (24) hours after service of the NCC CSP judgment to each person mentioned in the letter of OpenBet to Symphony dated 14 June 2019, with a simultaneous copy to [e-mail address 1] that:

a. any offer for employment by OpenBet and SGC is hereby withdrawn and shall not be effectuated; and

b. no work is required to be carried out for OpenBet and SGC, other than as per instruction by Symphony or its representatives;

3.1.3.

all requests subject to a periodic penalty payment of EUR 20,000.00 (twenty thousand euros), or such periodic penalty payment as determined by the NCC CSP in the proper administration of justice, per day or part of a day that OpenBet or SGC or both do not adhere to the NCC CSP judgment;

Alternative claim

3.1.4.

grant such relief considered justified by the NCC CSP with regard to the interests of Symphony;

Principal and alternative claim

3.1.5.

order OpenBet and SGC jointly and severally to pay the costs of these proceedings before the NCC CSP plus statutory interest until the day of payment.

Counterclaim

3.2.

OpenBet and SGC request the NCC CSP to order interim measures, enforceable notwithstanding appeal, to:

Principal counterclaim

3.2.1.

order Symphony, with immediate effect after service of the NCC CSP judgment, to fully comply with its obligations as set out in Schedule 5 to the MSA, and, more specifically, to:

a. provide all reasonable assistance to OpenBet to facilitate the orderly transfer of the services rendered on the basis of the MSA, more specifically (the services rendered by) the 33 Developers;

b. to the extent necessary, fully cooperate with and facilitate discussions between OpenBet and each of the 33 Developers to effect (i) the novation of the agreements between Symphony and the 33 Developers to OpenBet, and/or (ii) an alternative way of achieving a direct agreement between OpenBet and the 33 Developers;

c. continue to provide the services rendered on the basis of the MSA on a transitional basis until this transfer will have taken place;

d. until 1 August 2019, continue to grant OpenBet and OpenBet’s personnel rights of access to and occupation of the building in which the services have been rendered by Symphony;

e. use all reasonable endeavours to maintain the existing commercial and operational agreements required to provide the services rendered on the basis of the MSA;

f. not reassign or change any of the 33 Developers, without OpenBet’s prior consent in writing; and

g. refrain from any conduct that may frustrate the orderly transfer of the services rendered by the 33 Developers;

and

3.2.2.

order Symphony to confirm in writing within twenty-four (24) hours after service of the NCC CSP judgment, to each of the 33 Developers, with a simultaneous copy to [e-mail address 2] , that:

a. Symphony has been ordered by the NCC CSP to provide all reasonable assistance to OpenBet to facilitate the orderly transfer of the services rendered by said persons; and

b. Symphony shall refrain from any conduct that may frustrate this transfer; and

3.2.3.

each of the requests 3.1.1 and 3.1.2 subject to a periodic penalty payment of € 20,000.00 (twenty thousand euros), or such periodic penalty as determined by the NCC CSP in the proper administration of justice, per day or part of a day that Symphony does not comply with the NCC CSP judgment;

Alternative counterclaim

3.2.4.

grant such interim measures considered justified by the NCC CSP with regard to the interests of OpenBet and the 33 Developers;

Principal and alternative counterclaim

3.2.5.

order Symphony to pay the costs of these proceedings plus subsequent costs (
nakosten) and statutory interest until the day of payment.

4.Discussion

Jurisdiction, applicable law and urgency

4.1.

All parties explicitly accepted the jurisdiction of the Amsterdam District Court and subsequently agreed that the proceedings will be in English before the NCC. The MSA has a choice-of-court clause for the Amsterdam District Court. This means that this court has jurisdiction under article 25 of the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast). The requirements of articles 1.3.1 and 1.3.2 NCCR are met. These articles reflect article 30r Netherlands Code of Civil Procedure (CCP), which is the statutory framework for proceedings to be in English before the NCC CSP.

4.2.

The official copy of each document in the proceedings was submitted in hardcopy. In addition, counsel have affirmed their consent to use eNCC on a voluntary basis. No one has objected to this. eNCC has been used in this matter on that basis.

4.3.

Symphony and OpenBet chose Dutch law as the applicable law in the MSA. The court will apply Dutch law to all claims arising from that agreement.

4.4.

No contractual relationship exists between Symphony and SGC. Symphony’s claim is based in tort (
onrechtmatige daad). Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) applies. Article 4.3 Rome II states: “
Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.” This court rules that the alleged tort in this case is manifestly more closely connected to Dutch law. The contractual relationship between Symphony and OpenBet is at the core of the dispute, and the MSA is governed by Dutch law. SGC is involved in this conflict only as the parent company of OpenBet and – so Symphony claims – OpenBet’s tortious actions (the “poaching” of employees) are being done at the direction of SGC. These are therefore sufficient grounds to rule that Dutch law is to be applied to this non-contractual relationship between Symphony and SGC as well.

4.5.

Dutch procedural law (article 254 CCP) requires an urgent interest for claims for interim measures. This court rules that the matter is urgent by its nature.

Termination for cause

4.6.

OpenBet and SGC claim that Symphony is in breach of the MSA and refuses to cooperate and settle the matter in accordance with Schedule 5 of the MSA.

4.7.

This court has to decide whether the termination for cause by OpenBet was justified. OpenBet’s reasoning is laid out in the letter of its lawyers dated 26 February 2019 (see 2.4). As OpenBet relies on its termination of the agreement for its claim that it is not breaching article 7.4.2. of the MSA, the validity of that termination is what – within the limits of these summary proceedings – needs to be established. There is no assumption of validity regarding this termination, as argued by Mr. Huijzen on behalf of OpenBet, as the validity of the termination is at the heart of the matter presented to the court.

4.8.

Article 3.2.2. of the MSA requires a “material breach” as ground for termination. This term is not defined in the MSA and the parties differ on the severity of a breach necessary for the breach to qualify as a “material breach”. This court does not follow OpenBet in its argument that any breach (
iedere tekortkoming,as referred to in article 6:265 DCC) is a “material breach”, as that would make the adjective “material” meaningless. A “material breach” must be a significant, substantial breach of the agreement that justifies termination of the MSA.

4.8.1.

The first and second reasons given for termination cite the hiring of recruiters by Symphony and the recruiters’ performance. What is relevant here is whether those recruiters are “Assigned Staff Member(s)” as defined in the MSA. This court provisionally finds that is not the case. According to Dutch law, the correct interpretation of an agreement follows – in principle – from what both parties meant upon formation of the agreement, based on what they communicated and should reasonably have inferred and expected from each other’s statements (the
Haviltexrule). The services that Symphony is to perform under the MSA are related to the development of software. That is what the parties envisaged at the outset of their relationship. Symphony contracted developers to develop the software. The services were, this court understands, not defined in Statements of Work (as envisaged in the MSA), but communicated to the developers by means of project tracking software (Jira). It is not in dispute that Jira was only used to give instructions to the developers. Symphony billed OpenBet based on the salary of those developers, plus a gross margin. The support staff, including recruiters, were in principle paid out of this gross margin. Symphony and OpenBet modified this industry standard agreement, via a quarterly revision. OpenBet would – in effect – pay all the costs incurred by Symphony, for this project, with a 15% EBIT margin for OpenBet. If the “salary plus gross margin” that OpenBet was charged resulted in a margin greater than 15%, it would receive a refund. If Symphony’s margin was lower than 15%, then OpenBet would be billed the difference. OpenBet correctly argues this means that OpenBet fully bore the costs of all recruiters Symphony enlisted for this project. However, that alone is not enough to support that it follows that recruiters are to be seen as “Assigned Staff Member(s)” as defined in the MSA. The term “Assigned Staff Member(s)” is connected to the services Symphony was to provide. That is the development of software, not the recruitment of developers. In addition to what is set out above, this is clear from the following: only the developers’ salary was the basis for the initial billing; Schedule 3 must be limited to technical personnel (who get a “technical interview”, which has no meaning for recruiters or administrative staff); and Symphony has argued that the procedure set out in Schedule 3 was in practice also only applied to technical personnel and that OpenBet did not demand that article 3 be applied to recruiters in the start-up phase of the project. OpenBet does not meaningfully contest this argument.

Therefore this court provisionally rules that both parties can only have meant, and could not reasonably have expected otherwise, that only those contractors that were developers or had another technical role in developing the software qualify as “Assigned Staff Member(s)”.

4.8.2.

It follows from the above that there is no breach in not applying Schedule 3 to the hiring of recruiters. Symphony is of course bound by the principles of reasonableness and fairness and the obligations of a good contractor. However, the recordplausible does not support the accusation that Symphony acted contrary to those principles in hiring any of the recruiters. This court provisionally finds no material breach of the MSA here.

4.8.3.

OpenBet also claims that the recruiters underperformed. This cannot be established is these summary proceedings. As Symphony correctly states, during the start-up phase of the project it takes time and effort to find good personnel, who would often be bound to a notice period with their current employer. OpenBet had the right to reject potential hires and it appears it used this right judiciously, especially with regard to junior developers. According to Symphony, the leads for developers that OpenBet provided resulted in legal difficulties with the employer of those developers. This was not contested by OpenBet. For all these reasons, a fair comparison with the results OpenBet’s in-house recruiters delivered cannot be made. That means there is no factual basis to support the underperformance OpenBet alleges. In addition, OpenBet does not clearly argue what minimum performance follows from the MSA and therefore OpenBet cannot formulate clearly what specific conduct or act of Symphony constitutes a material breach of the MSA by Symphony. In these summary proceedings there is no room for further debate and examination of this claim. This court therefore finds at this stage no material breach of the MSA here.

4.8.4.

As OpenBet bore – in effect – the costs of this project, it argues correctly that Symphony is – in principle – to comply with a reasonable request to limit those costs. However, OpenBet fails to show that its request to “ramp down” supporting roles was reasonable. That would require at least an argument why those costs were not necessary for the project. No such argument is made. This court has already rejected OpenBet’s argument that those support roles qualify as “Assigned Staff Member(s)” as defined in the MSA. Moreover, OpenBet does not sufficiently dispute the claim that Symphony did substantially reduce the number of recruiters in accordance with OpenBet’s earlier “ramp down” requests. This court therefore finds no material breach of the MSA here either.

4.8.5.

The alleged overcharging is similarly unfounded. OpenBet does not sufficiently dispute that the costs it has been charged were actually incurred. Its claim is – in short – that these costs were unreasonable. However, this court finds insufficient argument to support that claim. This court recalls that OpenBet did not agree to an audit as provided for in Schedule 4 of the MSA, which could – at least in part – also assess the reasonableness of the costs. That the results of the activities were unsatisfactory is – if true – on its own not sufficient to support the allegation of overcharging, let alone that it would be sufficient grounds for a claim of financial compensation.

4.9.

In conclusion: this court finds – within the limits of these summary proceedings – no material breach of the MSA by Symphony. This court holds that it is sufficiently likely that in proceedings on the merits, OpenBet’s argument that it could terminate the agreement will not prevail and that therefore OpenBet’s reliance on Schedule 5 would fail.

Interpretation of article 7.4.2. of the MSA

4.10.

OpenBet, however, argues that even if it did not terminate the agreement, it cannot be prohibited from approaching Symphony’s contractors, as Symphony’s reliance on article 7.4.2. of the MSA is without merit. This dispute centres on the definition of “employees” in article 7.4.2. of the MSA. According to Symphony, article 7.4.2. of the MSA is a blanket prohibition on solicitation of all its personnel, including contractors. OpenBet disputes this interpretation of this provision. According to OpenBet, only solicitation of actual employees of Symphony and not the contractors is prohibited.

4.11.

Again the deciding factor is what both parties to the agreement meant upon formation of the agreement, based on what they communicated and should reasonably have inferred and expected from each other’s statements. OpenBet refers to several relevant factors (it is a commercial contract, drawn up by Symphony, with the assistance of its in-house legal counsel) that suggest that the text of the agreement should be taken literally. Apparently, according to OpenBet, Symphony’s main interest was in preventing solicitation of its employees, and not of its contractors, as these terms are not interchangeable but each have a distinct legal meaning. That reasoning is not convincing. Both parties were aware that Symphony would use contractors for the development of software. These contractors are referred to as “members of Symphony personnel” in the MSA and are key for Symphony to perform the agreed services and to be able to provide value to its clients. Both parties use the word “employee” in its ordinary meaning to refer to Symphony’s contractors. Against this background, OpenBet’s reasoning that both parties understood "employees" in a limited, technical or legal sense would make no business sense and is – in the end – not persuasive. This court also notes that the heading of article 7.4. refers to “Non recruitment of personnel”. The word “personnel” is used throughout the MSA to refer to contractors. Both parties to the agreement could therefore reasonably expect the prohibition against solicitation of “employees” to prohibit solicitation of those contractors as well.

It is not relevant whether Symphony terminated the MSA as this prohibition survives termination, as is made explicit in article 8.10 of the MSA.

SGC

4.12.

SGC is not a party to the MSA and OpenBet and SGC argue that there is no legal or factual basis for a judgment against SGC. This court finds however that the circumstances justify a judgment against SGC. The parties agree that OpenBet is part of “Scientific Gaming Digital”, a division of but not one specific legal entity within the Scientific Gaming Group. The project that Symphony was contracted for by OpenBet regarded (also) the Scientific Gaming Digital division. Furthermore, SGC does not dispute that it directed OpenBet to approach Symphony’s personnel, in contravention of the MSA, that it is involved with the offers of employment to the 33 Developers, and that it is in a position to direct the other legal entities within the Scientific Gaming Digital division. Under these circumstances, SGC is committing a tort. SGC can be prohibited from approaching Symphony’s personnel and can be ordered to notify the 33 Developers that any offer of employment by either OpenBet or SGC shall not be effectuated. A different decision on this point would make the order against OpenBet futile, as SGC itself or through another legal entity could continue to allow the MSA to be breached.

Concluding remarks

4.13.

Symphony’s claims will be awarded and the counterclaim must be dismissed.

4.14.

Because Symphony claims it itself terminated the MSA, the prohibition will be limited to one year, as per article 7.4.2. of the MSA. This court will limit the prohibition to those contractors, including the 33 Developers, that are currently or were on the day of service of the writ of summons assigned to the OpenBet teams, as the dispute is limited to those contractors and this court has insufficient information about the activities of all parties to give a broader prohibition. Each defendant will incur a penalty for breach of the relevant order. The penalties will be incurred per day for the failure to inform the 33 Developers and for each time either OpenBet or SGC violates the prohibition of solicitation of Symphony’s personnel. The penalty for each entity will be limited to € 2 million.

Costs

4.15.

The application of Dutch procedural law means that only limited costs will be awarded, in accordance with article 237 CCP. This court refers to Annex III to the NCCR: this case is in the ordinary category for purposes of costs in summary proceedings. This court will therefore award Symphony € 2,000.00 for the cost of representation, in addition to the court fees and cost of service since Symphony prevailed with its claim. The statutory interest as defined in article 6:119 DCC applies and will be calculated over the amount awarded, starting after a reasonable period of two weeks for voluntary performance.

4.16.

OpenBet and SGC are the unsuccessful parties in their counterclaim. Based on the connection between the claim and the counterclaim, the costs awarded for the counterclaim are decreased by one-half. Therefore, this court will award Symphony € 1,000.00 for the costs of representation. Statutory interest over this amount has not been claimed.

5.Conclusion and order

THE COURT IN SUMMARY PROCEEDINGS:

Claim

5.1.

prohibits each of OpenBet and SGC, with immediate effect after service of this judgment, to solicit, procure for employment and/or give instructions to, any employee of Symphony or person working as a contractor for Symphony who was on 21 June 2019 (the date the writ of summons was served) and/or is at the date of this judgment carrying out work for OpenBet and/or SGC, including the persons mentioned in the letter of OpenBet to Symphony dated 14 June 2019, other than through Symphony or with Symphony's prior written consent, for a period of twelve (12) months after service of this judgment;

5.2.

orders OpenBet and SGC to confirm in writing, within twenty-four (24) hours after service of this judgment, to each person mentioned in the letter of OpenBet to Symphony dated 14 June 2019, with a simultaneous copy to [e-mail address 1] , that:

a. any offer for employment by OpenBet and/or SGC is hereby withdrawn and shall not be effectuated; and

b. no work is required to be carried out for OpenBet and SGC, other than as per instruction by Symphony or its representatives;

5.3.

orders OpenBet to pay a penalty of € 20,000.00 (twenty thousand euros) each time that OpenBet does not comply with the order given under 5.1 of this judgment, and a penalty of € 20,000.00 (twenty thousand euros) per day or part of a day that OpenBet does not comply with the order given under 5.2 of this judgment, with a maximum of € 2,000,000.00 (two million euros);

5.4.

orders SGC to pay a penalty of € 20,000.00 (twenty thousand euros) each time that SGC does not comply with the order given under 5.1 of this judgment, and a penalty of € 20,000.00 (twenty thousand euros) per day or part of a day that SGC does not comply with the order given under 5.2 of this judgment, with a maximum of € 2,000,000.00 (two million euros);

5.5.

orders OpenBet and SGC jointly and severally to pay the costs of these proceedings:

costs for notice of service: € 81.83

court fee: € 7,500.00

costs for legal representation: € 2,000.00

total: € 9,581.83,

plus statutory interest from 18 July 2019 day until the day of payment;

5.6.

dismisses all other claims;

Counterclaim

5.7.

dismisses the counterclaim of OpenBet and SGC;

5.8.

orders OpenBet and SGC jointly and severally to pay the costs of these proceedings:

costs for legal representation: € 1,000.00;

Claim and counterclaim

5.9.

this judgment is enforceable notwithstanding appeal.

Done by R.A. Dudok van Heel, Judge, assisted by E.J. van Veelen, Clerk of the Court.

Issued in public on 4 July 2019.

APPROVED FOR DISTRIBUTION IN eNCC

THE SIGNED ORIGINAL IS IN THE HARDCOPY FILE

Kort geding over het kapen van IT-personeel en de beëindiging van de Master Services Agreement

Uitspraak

AMSTERDAM DISTRICT COURT

4 July 2019

1. OPENBET LIMITED,

2. SCIENTIFIC GAMES CORPORATION,

1.Procedural history

2.Facts

3.The claim and counterclaim

Claim

4.Discussion

Jurisdiction, applicable law and urgency

5.Conclusion and order