John J. Donovan Loses Again

Excerpts: John J. Donovan Loses Again

  • In Brining v. Donovan, the latest blow to former MIT business professor, John J. Donovan, Judge Davis held that shareholders in Donovan’s failed internet start-up, SendItLater (SIL), could recover more than $700,000 in attorneys’ fees in addition to a December 2019 award of $1.57 million in damages.
  • Relying on equitable principles, Judge Davis also prohibited Donovan’s company and SIL shareholder, Securenet Holdings, LLC (Securenet), from sharing in the award. Judge Davis also ruled that the award must be distributed to the remaining shareholders based on each shareholder’s investment, rather than per-share basis, so as to render shares obtained by Donovan’s wife, Linda Donovan, under “suspect” conditions effectively worthless.
  • Brining requested approximately $700,000 in attorneys’ fees and costs under G.L. c. 156D, § 7.46, a statute authorizing a court to order a corporation to reimburse the reasonable expenses incurred by a plaintiff-shareholder who provides a substantial benefit to the corporation.
  • As to the approximately 1,355 hours expended by Brining’s counsel over the course of the three-year litigation, Judge Davis ruled that the hours were reasonable. Judge Davis noted that Donovan’s misconduct was “brazen and pervasive,” including his “misappropriation of millions of dollars of SIL funds” to pay for personal expenses, such as “the cost of his haircuts, his home real estate taxes, and his Myopia Hunt Club and Netflix membership fees[,]”; the use of corporate resources to support Donovan’s other entrepreneurial endeavors and maintain his personal Wikipedia page; and the “creation of various fraudulent promissory notes, leases, and invoices.” Judge Davis also noted that “investigating, understanding, documenting, and ultimately proving Mr. Donovan’s extensive wrongdoing at trial presented a formidable task.”
  • The Business Litigation Session of the Massachusetts Superior Court: BLS1
  • Docket Number: 1684CV03422-BLS1
  • Case Name: Brining v. Donovan
  • Date of Decision: May 29, 2020
  • Judge’s full name: Judge Brian A. Davis

Source: JD Supra