Opinion
NOCV201600060
06-28-2018
Janice GORDON et al. v. CONNECTED LIVING et al.
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
Rosalind H. Miller, Justice Superior Court
The plaintiffs Janice Gordon and Thomas Racca bring this action for retaliation against the defendants Connected Living and its Chief Executive Officer, Sarah Hoit (Count I). The plaintiffs also bring claims for tortious interference against Hoit (Count III) and breach of the implied covenant of good faith and fair dealing against Connected Living (Count IV). Racca separately alleges that Connected Living breached its employment agreement with him (Count II). The matter is now before the Court on the defendants’ motion for partial summary judgment on Counts I, III, and IV. For the reasons that follow, the defendants’ motion is DENIED.
BACKGROUND
The following facts are undisputed.
Connected Living ("CL") is a company that sells services and technology designed to connect seniors to their families and friends. The company was co-founded by Christopher McWade and Sarah Hoit, and Hoit serves as its CEO. CL is governed by a board of directors on which, during all relevant times, both McWade and Hoit were members.
In 2010, CL received a federal grant to establish broadband technology at affordable housing communities. When the technology was installed, CL developed the "Connected Living Center" ("the Call Center") which was an 800 number help-line which clients could call seven days a week for any type of support. As operations grew, CL tasked specific staff with ensuring coverage of the Call Center. CL classified all employees, including those that worked for the Call Center, as exempt workers and paid them a salary.
In May 2012, Racca joined CL as a consultant to work on strategic marketing, publicity and sales efforts, and streamlining product priorities. After a few months as a consultant, CL hired Racca as its Chief Operating Officer. The parties executed an employment agreement and Racca began his position as COO on September 4, 2012.
As COO, Racca authored a 100-day plan for the company and began assessing its strengths and challenges. During his review of company operations, he learned that CL’s then Executive Vice President of Sales had not been paid long accrued commissions by CL. He raised this issue with CL’s Comptroller Patti Holbrook who was not aware of the legal implications. Racca then sought to have two other personnel issues reviewed.
In October 2012, Racca reached out to Gordon, a colleague with knowledge and experience in human resources, to do a preliminary review of CL’s organizational structure to ensure CL was in compliance with federal and state employment laws. Gordon interviewed Holbrook and Neil Sullivan, Vice President of Customer Experience and Social Impact, as part of her review. During her interview with Holbrook, Gordon expressed her concern that CL employees who took customer service calls after hours could pose a risk to the company due to potential violations of the wage and overtime laws. Holbrook advised Gordon that the employees were classified as exempt and therefore did not receive overtime.
Based on her interviews, Gordon drafted a "Human Resources Primary Review" in which she outlined a number of HR practices that appeared to fall short of best practices from a compliance perspective as well as issues with accounting and management of sales commissions that could expose CL to legal risks. The report noted that CL did not consistently track employees’ vacation and personal time. With regard to salary classifications, the report stated: "Salary job classifications-out of compliance: This presents a potential high legal risk and substantial fines can be imposed for violations of appropriate payment of overtime for nonexempt (FLSA) employees. CLC employees in particular fall into this category."
In January 2013, Gordon joined CL as Vice President of Corporate Organization and Development. After being hired, Gordon researched the potential misclassification of CLs employees on the Department of Labors website. She also reviewed employees’ offer letters and discussed their job responsibilities with their respective bosses. Gordon told Racca that she believed two employees, Darren Noisette and Bridgette David, were misclassified as exempt employees.
David was a salaried employee for CL who was also required to answer calls for the Call Center between 6:00 p.m. and 9:00 p.m. She was not compensated for those additional hours. In March 2013, Gordon spoke with David about her work hours and compensation. David told Gordon that she felt it was a "burden" to take calls at night on the weekends. Noisette and some other employees also had concerns about working twelve-hour days. After Gordon discussed the matter with Racca, Racca told her that he raised the issue previously with McWade and Hoit in October 2012, and they told him that these employees were exempt and therefore not paid overtime. Gordon then met with Hoit and strongly suggested that she look into David’s classification. Hoit did not believe it was necessary to do so. During a subsequent meeting with Hoit and Racca, Gordon again raised her concerns. Thereafter, David was informed that CL would not raise her salary.
In April 2013, Gordon reviewed the list of employees eligible to receive health and dental insurance through CL. She discovered that since 2011, the Chairman of CL’s Board of Directors Lawrence Rosenfeld was listed as a covered employee and receiving full health benefits for his family. Rosenfeld, however, was not an active employee eligible for insurance based on the contract CL had with its insurer. Gordon spoke with Holbrook about this discovery, and Holbrook admitted she was unaware of the arrangement. Gordon raised her concerns with Hoit, but Rosenfeld continued to receive health benefits. Gordon then contacted CL’s insurance broker who confirmed that Rosenfeld was not supposed to be receiving health insurance and told Gordon that the arrangement was in violation of the Massachusetts Fair Share Contribution laws. Gordon forwarded this information to Racca who spoke with McWade and Hoit about the issue and then with Rosenfeld directly to no avail. Gordon then refused to sign the insurance renewal application confirming a list of eligible employees that included Rosenfeld.
On May 2, 2013, Racca attended a CL Board meeting. The parties dispute what happened at the board meeting, but one member of the board testified that after hearing the issues Racca raised at the board meeting, he felt "vulnerable" to personal liability as a fiduciary of the company. He recommended that Hoit be promoted to Chairman and that Racca assume the position of CEO and President and offered to resign immediately if the board did not accept his recommendation.
After the meeting, Hoit felt it was better if Racca was no longer part of CL. Racca’s employment with CL ended on May 4, 2013. It is unclear whether he resigned or was terminated. Shortly thereafter, CL terminated Gordon’s employment.
Gordon and Racca filed their complaint against CL and Hoit on January 20, 2016.
DISCUSSION
Summary judgment is appropriate when the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Mass.R.Civ.P. 56(c); see also DuPont v. Comm’r of Correction, 448 Mass. 389, 397 (2007). The moving party bears the initial burden of demonstrating that there is no triable issue and he is entitled to judgment. NG Bros. Constr., Inc. v. Cranney, 436 Mass. 638, 644 (2002), citing Pederson v. Time, Inc., 404 Mass. 14, 17 (1989); Kourouvacilis v. Gen. Motors Corp., 410 Mass. 706, 716 (1991). In deciding a motion under Mass.R.Civ.P. 56(c), the Court may consider pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Cassesso v. Comm’r of Correction, 390 Mass. 419, 422 (1983). The Court views the evidence in the light most favorable to the non-moving party and draws all reasonable inferences in his favor. Jupin v. Kask, 447 Mass. 141, 143 (2006), citing Coveney v. President & Trustees of the College of the Holy Cross, 388 Mass. 16, 17 (1983); see also Simplex Techs., Inc. v. Liberty Mut. Ins. Co., 429 Mass. 196, 197 (1999). Applying this standard, the Court finds that material issues of fact preclude summary judgment.
A. Count I: Retaliation
In Count I, the plaintiffs claim that the defendants retaliated against them under G.L.c. 149, § 148A and under common law. The defendants argue that they are entitled to summary judgment on the statutory claim because the plaintiffs did not assert rights which would trigger the protections of G.L.c. 149, § 148A, and because there was no causal connection between the plaintiffs’ complaints and their terminations of employment. The defendants also contend summary judgment should be allowed on the common-law retaliation claim because there exists an exclusive statutory remedy. The Court disagrees.
General Laws. c. 149 provides statutory protection for employees who complain to their employers about potential Wage Act violations. Under § 148A:
No employee shall be penalized by an employer in any way as a result of any action on the part of an employee to seek his or her rights under the wages and hours provisions of this chapter.
Any employer who discharges or in any other manner discriminates against any employee because such employee has made a complaint to the attorney general or any other person ... shall have violated this section and shall be punished or shall be subject to a civil citation or order as provided in section 27C.
The first paragraph protects an employee who "reasonably believes that the wages he or she has been paid violate [the wage law]" and makes a complaint to his or her employer. Smith v. Winter Place, LLC, 447 Mass. 363, 367 (2006). "[T]he language of the second paragraph expands the range of persons and conduct protected by the statute, and likely would protect an employee (or manager) from being punished for asserting the right of another employee or complaining to management on that employee’s behalf." Id. at 369.
Here, there is evidence in the record that Racca spoke with Holbrook about CL’s failure to pay commissions to an employee and repeatedly discussed the possible misclassification of employees with Hoit. There is also evidence that on multiple occasions, Racca and Gordon spoke to Hoit about their concerns that employees were not properly being paid overtime for answering phones for the Call Center after hours and on the weekends. Gordon advocated on behalf of one employee in particular, David, in expressing her belief that David was not properly being compensated. Such actions went beyond merely conveying complaints of others to an employer. Compare Smith, 447 Mass. at 369 (plaintiff’s mere conveying of employee complaints to management about a system the plaintiff himself created did not amount to asserting employees’ rights). Based on the evidence in the record, whether the plaintiffs raised these issues in an effort to assert the rights of employees or solely to assist CL in avoiding liability is a question of fact.
The defendant’s reliance on Reiser & Company v. Scriven, 2016 WL 4579966 (D.Mass. 2016) is misplaced. In Reiser & Company, the court did not decide the question of whether the plaintiff’s actions sufficiently asserted rights under § 148A because it found there was no evidence that the termination was connected to the plaintiff’s complaints. Moreover, the evidence here that the plaintiffs repeatedly raised concerns about Wage Act violations to the defendants is certainly more robust than the evidence in Reiser & Company. See id. at *7.
It is also a question of fact whether there was a causal connection between the plaintiffs’ complaints about potential Wage Act violations and their terminations of employment. The terminations were sufficiently close in time to the complaints to create a question as to whether they were related. See Mole v. University of Massachusetts, 442 Mass. 582, 595 (2004) ("Where adverse employment actions follow close on the heels of protected activity, a causal relationship may be inferred). Furthermore, there are numerous disputes of fact regarding the defendants’ responses to the plaintiffs after the plaintiffs raised concerns about employees’ wages and hours that, if proven, lend support to the plaintiffs’ claim that their terminations were a result of their complaints. As such, the statutory retaliation claim is not appropriate for summary judgment.
The defendants’ argument for dismissal of the common-law retaliation claim is equally unavailing. The defendants are correct that when the Legislature has provided a statutory cause of action to an at-will employee who has been discharged for exercising her statutory rights, there is no need to add a common-law remedy. See Mello v. Stop & Shop Cos., 402 Mass. 555, 557 (1988). However, a claim under the common law exists where the Legislature has not prescribed a statutory remedy but has expressed a public policy position concerning the rights of employees, and an employer terminates an employee in violation of that policy. See id. On the record before the Court, a reasonable jury could find that the defendants terminated the plaintiffs for their objection to and refusal to acquiesce in the insurance arrangement between CL and Rosenfeld. Such actions would not give rise to a claim under of G.L.c. 149, § 148A, but may support a retaliation claim under the common law. See DeRose v. Putnam Management Co., 398 Mass. 205, 209-10 (1986). Accordingly, the common-law retaliation claim is sufficiently supported.
Although the defendants dispute the nature of their actions, they do not appear to contest that there is public policy in protecting an employee who objected to misrepresentations to an insurer.
B. Count III: Tortious Interference
The defendants contend that Hoit cannot be held liable for tortious interference because as an executive officer of CL, her actions are indistinguishable from CL. The defendants’ argument, however, fails to recognize that a corporate officer may be held liable for tortious interference if the plaintiff shows that the officer acted with "actual malice," meaning "a spiteful, malignant purpose, unrelated to the legitimate corporate interest" of the employer. See Weber v. Community Teamwork, Inc., 434 Mass. 761, 781-82 (2001). "Proof that a corporate officer retaliated against an employee for raising a wage claim is sufficient to permit (but not compel) the inference that the plaintiff met the ‘heightened burden’ of proving actual malice." Fraelick v. PerkettPR, Inc., 83 Mass.App.Ct. 698, 708 (2013). Accordingly, because it is a question of fact whether Hoit retaliated against the plaintiffs because they raised wage claims, summary judgment must be denied on Count II.
C. Count IV: Breach of the Implied Covenant of Good Faith and Fair Dealing
The defendants argue that the plaintiffs’ claim for breach of implied covenant of good faith and fair dealing is preempted by the Wage Act. However, as discussed herein, there is evidence in the record creating a dispute of fact whether the defendants terminated the plaintiffs’ employment due to their complaints about defendants’ employment practices that fell outside the scope of the Wage Act. The defendants have advanced no other arguments for summary judgment on the implied covenant claim. Therefore, the motion with respect to Count IV is also denied.
ORDER
For the reasons stated above, the defendants’ motion for summary judgment is DENIED.