Opinion
216-2021-CV-238
07-30-2021
Paul D. Labbe and James P. Golden v. Contour Design, Inc.
Order on Motion to Dismiss Count II and VI
Defendant moves to dismiss Plaintiffs' wage claims, arguing that the alleged promise of a 2% ownership interest in Defendant or a predecessor company cannot be the basis of a wage claim. Defendant's motion is GRANTED.
Facts
The following facts are drawn from Plaintiffs' Complaint. Plaintiffs allege that at all relevant times they were employees of the Defendant. They both claim that in October 2019 Defendant offered each of them a "two percent (2%) ownership share of the Defendant company as part of [their] continued employment with the Defendant." Complaint, ¶¶ 8, 13. They both claim that Defendant has failed to "provide" them "with the two percent (2%) ownership share of the Defendant company. . . ." Id., ¶¶ 10, 15.
Plaintiffs' complaint alleges eight claims. Two of the claims, Count II and VI, claims that the foregoing facts constitute a violation of New Hampshire Wage Statute, RSA 275:43. Defendant moves to dismiss these two claims, arguing that a promise of equity in a company does not qualify as wages under the RSA 275:43.
Analysis
In ruling on a motion to dismiss, the Court determines "whether the allegations contained in the pleadings are reasonably susceptible of a construction that would permit recovery." Pesaturo v. Kinne, 161 N.H. 550, 552 (2011). The Court scrutinizes the facts contained on the face of the complaint to determine whether a cause of action has been asserted. In re Guardianship of Madelyn B., 166 N.H. 453, 457 (2014). The Court "assume[s] the truth of the facts alleged by the plaintiff and construe[s] all reasonable inferences in the light most favorable to the plaintiff." Lamb v. Shaker Reg'l Sch. Dist., 168 N.H. 47, 49 (2015). The Court "need not, however, assume the truth of statements that are merely conclusions of law." Id. "The trial court may also consider documents attached to the plaintiff's pleadings, or documents the authenticity of which are not disputed by the parties[,] official public records[,] or documents sufficiently referred to in the complaint." Beane v. Dana S. Beane & Co., P.C., 160 N.H. 708, 711 (2010). "If the facts do not constitute a basis for legal relief, [the Court will grant] the motion to dismiss." Graves v. Estabrook, 149 N.H. 202, 203 (2003).
RSA 275:43 requires employers to pay wages due within specified time periods depending on whether they are paid weekly or biweekly. RSA 275:42 III defines wages as follows:
The term "wages" means compensation, including hourly health and welfare, and pension fund contributions required pursuant to a health and welfare trust agreement, pension fund trust agreement, collective bargaining agreement, or other agreement adopted for the benefit of an employee and agreed to by his employer, for labor or services rendered by an employee, whether the amount is determined on a time, task, piece, commission, or other basis of calculation.For the purpose of this dispute, the most critical language in this definition is the last clause: "whether the amount is determined on a time, task, piece, commission or other base of calculation." RSA 275:42 III. This language makes clear that wages must be something that can be calculated into a dollar figure. The word "amount" refers to the amount of money owed to the employee. The remainder of the clause establishes that wages can be calculated a number of ways but there must be some method of calculation. In other words, wages only encompass obligations that can be stated in terms of dollars owed.
With this straightforward guidance from the Wage Statute, it is apparent that the two percent equity interest allegedly promised to Plaintiffs is not wages under RSA 275:42. First, a 2% equity interest is not something that can be readily calculated. One would first have to have the company appraised and even appraisals are often subject to disagreements among appraisers given the varying methods of conducting a business appraisal and the imprecision of those appraisals generally. In arguing that a promised equity interest is wages, Plaintiffs are unreasonably expanding the definition of calculation. The examples provided by the statute - time, task, piece and commission - are all figures that can be easily calculated with certain data in hand: hours worked, tasks completed, pieces made, and sales made. Arriving at the value of a company is a much more complicated and imprecise task. A fair reading of the statute establishes that it does not apply to promised equity interests because their value cannot be easily calculated.
Second, Plaintiffs do not allege that Defendant made any promises in terms of stock redemption. That is a significant omission because in the absence of such an agreement New Hampshire law generally does not grant minority shareholders the right to insist on redemptions unless there are problems associated with the company that have not been alleged here. Assuming the truth of Plaintiffs' allegations, which this Court must do in addressing a motion to dismiss, the alleged stock ownership promises would only entitle Plaintiffs to the issuance of stock certificates. Certificates are simply not an "amount" of money owed under the Wage Statute.
Plaintiffs rely on Ives v. Manchester Subaru, Inc., 126 N.H. 7, 796, 801 (1985). In Ives, the employer promised its general manager that it would pay him "50% of the agency's bottom line, i.e. its annual pre-tax profit, with a guaranteed draw of $700 per week." Id. at 798. The supreme court held that this payment arrangement constituted wages. The supreme court's analysis, however, makes clear that its holding is distinguishable from these facts. As an initial matter, the supreme court emphasized that the plaintiff in that case owned no stock and therefore had to be considered an employee. In so doing, the court necessarily distinguished a promise of stock options from a profit-sharing promise. More importantly, the court emphasized "that there can of course be no liability under this statute until such time as wages can be calculated as due. In this case the only wages in question were earned in the fiscal year that ended more than a month before the plaintiff was fired, and the bookkeeper's records allowed for prompt calculation." Id. at 801. This language highlights two crucial distinctions between the facts in Ives and this case. First, as noted above, under the facts alleged, Plaintiffs would not be entitled to any payment but rather would receive stock certificates. Second, also as discussed above, even if Plaintiffs had pled facts that suggested a right to immediate stock redemption, there would be no way to conduct a "prompt calculation" of their value. For both reasons, the Court concludes that Ives provides little guidance.
For the foregoing reasons, the Court concludes that the Wage Statute does not apply to the facts alleged in this case. Accordingly, Counts II and VI are DISMISSED. SO ORDERED. July 30, 2021
Date
/s/_________
Judge David A. Anderson