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Gallant v. Boston Executive Search Associates, Inc.

United States District Court, D. Massachusetts

June 12, 2015



F. DENNIS SAYLOR, IV, District Judge.

This action arises out of an employment termination. Jurisdiction is based on diversity of citizenship. Plaintiff Rachel Gallant has brought suit against defendants Boston Executive Search Associates, Inc. ("BESA") and Philip G. Morimoto, alleging claims for violation of the Massachusetts wage law, breach of fiduciary duty, breach of contract, and promissory estoppel.

The parties have filed cross-motions for partial summary judgment. For the following reasons, the motions will be granted in part and denied in part.

I. Background

A. Factual Background

1. BESA and Morimoto

BESA is a Massachusetts corporation with a principal place of business in Cambridge, Massachusetts. (Morimoto Aff. ¶¶ 1-2). It is a legal recruiting firm that specializes "in lateral partner placements into top-tier regional, national, and international law firms." (Morimoto Aff. ¶ 2).

Philip Morimoto is the founder, president and sole shareholder of BESA. ( Id. ¶ 1). He resides in Somerville, Massachusetts. ( Id. ¶ 1). He has worked in the legal recruiting industry for more than 12 years. ( Id. ).

BESA employs legal recruiters to

identify and evaluate qualified candidates for lateral partner positions, work with those candidates to understand their career ambitions, develop relationships with prominent law firms to understand their strategic growth objectives, determine appropriate matches between candidates and law firms, introduce the candidate to the law firm, coordinate the interview process, and serve as intermediary during the sometimes extended process until the candidate joins the firm as a partner.

( Id. ¶ 3). When BESA places a lateral partner, it receives a commission for its services. ( Id. ¶ 4).

2. Hiring of Gallant

Rachel Gallant has a law degree from the University of Memphis School of Law. (Morimoto Aff. ¶ 9). She worked as an attorney in Memphis until 2009. ( Id. ). In April 2010, Gallant contacted BESA while searching for employment as an attorney. ( Id. ¶ 8). On May 5, 2010, Morimoto offered her a job at BESA. The offer was set forth in an e-mail that stated as follows:

I would like to offer you "employment at will" at [B]ESA at the rate of $4, 750 per month with an additional $250 per month as a contribution to your healthcare coverage. Commission will be at a rate of 20% of the gross fee if you recruit a candidate that we subsequently place with one of our clients. Please note that commission is subject to the terms and conditions of our guarantees documented in the fee agreements we have with our clients.
This offer is contingent upon favorable reference checks. Please let me know if these terms are acceptable. If so, please let me know which references I can call.
We would be delighted to have you become part of [B]ESA.

(Defs.' SMF Ex. B). Gallant replied to Morimoto's e-mail that same day. ( Id. Ex. C). She wrote, "[t]he terms are acceptable to me and I would love to work with [B]ESA. I left you a voicemail with my agreement as well." ( Id. ).

At the time she was hired, Gallant understood she was hired as an at-will employee. (Gallant Dep. 86:5-19). She began working at BESA as a legal recruiter on May 10, 2010. (Morimoto Aff. ¶ 12). At that time, she received a salary of $4, 750, a $250 contribution to her healthcare, and 20 percent commissions of gross fees for any candidate whom she recruited who was placed with one of BESA's law firm clients. (Morimoto Aff. ¶ 13).

3. Gallant's Compensation Terms and Title

During her tenure with BESA, the terms of Gallant's compensation and her title changed on more than one occasion. At some point after she was hired, BESA agreed to modify her compensation so that in addition to receiving 20 percent commissions of gross fees for any candidate for whom she recruited who was placed with one of BESA's law firm clients, she would also receive 20 percent commission of the gross fees for any candidate who was placed with a law firm client that she managed. (Morimoto Aff. ¶ 14).

In an effort to "boost her marketing efforts, " Gallant was given various job titles, including Search Consultant, Legal Consultant, Partner Placement Consultant, Vice President of International Markets, and Strategic Alliance Officer. (Morimoto Aff. ¶ 41).[1] In 2011, she was named General Counsel of BESA. (Gallant Opp. Aff. ¶ 1). In that role, she contends that she rendered legal advice, reviewed and negotiated contracts of various types, represented BESA in internal legal disputes, and interacted and collaborated with outside legal counsel for BESA. ( Id. ). She continued to perform legal recruiting after she became General Counsel. ( Id. ).

In January 2012, Gallant's base salary was changed to $3, 250 per month and her commission was increased to 25 percent of the gross fee for candidates for whom she recruited and 25 percent of the gross fee for law firm clients that she managed. (Morimoto Aff. ¶ 15). As a result, she could receive up to 50 percent of gross fees received by BESA for law firm placements. ( Id. ).[2]

4. Discussions Concerning Possible Reorganization of BESA

In a September 25, 2012 e-mail to Kate Gascoigne, Morimoto stated that "it makes sense to reorganize [BESA] as a partnership and appoint [Ms. Gascoigne] as an equity partner." (Gallant Opp. Aff. Ex. A). In the e-mail, Morimoto stated that

people can become equity partners by: being off salary for a minimum of three years, consistently generated revenue as lead client manager, regularly recruiting candidates we place, regularly managing and closing deals, tenure at [BESA] of more than five years, earning non-equity partnership status through being part of over [$]1 [million] in [BESA] deal work..., and earning a minimum of 5 percent before eligible for equity status[, ] being part of [$]5 [million] in deals....

( Id. ). The e-mail went on to state that "[n]on-equity partners must have earned 1 point/percent by being part of deals generated [$]1 [million] in revenue in a calendar year-if thi[s] happens, they have earned a partner title and are income partners at [BESA]. Rachel [Gallant] would be a partner with one or two points." ( Id. ).[3] A subsequent e-mail dated October 5, 2012, from Morimoto to Gascoigne, stated that "I will bring the reality of your status as full partner of [BESA] to [Gallant's] attention next week...." (Gallant Opp. Aff. Ex. A)

Gallant contends that around that time, she had a conversation with Morimoto in which he informed her that he was making her an income partner. (Gallant Aff. ¶ 3). She contends that he also informed her that he intended to reorganize BESA and make her an equity partner with him in BESA. ( Id. ).

In March 2013, Gallant relocated from Boston to open a BESA office in New York. ( Id. ¶ 5). Defendants contend that in April 2013 Morimoto "decided to give her a new title of Partner' to increase her perceived clout with the status conscious New York law firms." (Morimoto Aff. ¶ 42). Gallant contends that he provided her with business cards describing her as a "Partner, " changed BESA's website to identify her as "Partner, " and referred to her as a "Partner" to prospective clients. (Gallant Opp. Aff. ¶ 6). She contends that upon becoming ...

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