United States District Court, D. Massachusetts
Michael Smith, a single person, Plaintiff, Counter Defendant:
T. Jeffrey Keane, LEAD ATTORNEY, KEANE LAW OFFICES, SEATTLE,
WA; Ellen J. Zucker, Erica F. Mastrangelo, Burns & Levinson
LLP, Boston, MA; Lawrence P Murray, Burns & Levinson, Boston,
Zipcar, Inc., a Delaware corporation, Defendant: Ashley E.
Tessier, E. Macey Russell, Gary D. Finley, Alison C. Reif,
Choate, Hall & Stewart, Boston, MA; Laura T Morse, LANE
POWELL PC, SEATTLE, WA.
Avis Budget Group, Inc., Third Party Witness: Gary D. Finley,
Choate, Hall & Stewart, Boston, MA.
Zipcar, Inc., a Delaware corporation, Counter Claimant: E.
Macey Russell, Gary D. Finley, Alison C. Reif, Choate, Hall &
Stewart, Boston, MA.
B. Saris, Chief Unites States District Judge.
case stems from Plaintiff Michael Smith's 47-day
employment at Zipcar, the Boston-based car sharing company.
While Plaintiff was negotiating his executive compensation
package, which included stock options, Zipcar was
contemplating a possible merger with Avis Budget Group
(Avis). When the merger later went
through, the stock options became worthless. After his
employment terminated, Plaintiff brought this action
alleging, among other things, that Zipcar engaged in fraud
and negligent misrepresentation by failing to disclose the
merger talks, and that Zipcar breached his employment
contract by failing to award him appropriate severance.
moved for summary judgment on all claims (Dkt. No. 94). After
hearing (Dkt. No. 124), Defendant's motion for summary
judgment is ALLOWED IN PART and DENIED IN PART.
facts are construed in the light most favorable to Plaintiff.
September 2012, Zipcar set out to find a new " Executive
Vice President, Technology." It retained an executive
search firm, which recruited Smith. Then employed by Disney,
Smith had previously worked for such blue-chip technology
companies as Microsoft and Google. Over the course of fall
2012, Plaintiff met with Zipcar's then-CEO Scott Griffith
and other senior executives. Impressed with Smith's
qualifications, Zipcar made him an employment offer on
November 15, 2012. This initial offer, however, was not to
Smith's liking. In negotiations with the company's
Human Resources Director, he sought enhanced stock options
and a " Chief Technology Officer" (CTO) title. A
new offer was made on November 27; this too was rejected, and
the negotiations pressed on.
December 11, Zipcar sweetened its offer, and Smith accepted.
The final compensation package featured a grant of 105,000
options, to vest over a four-year period. The package also
included an annual salary of $290,000; an annual bonus equal
to fifty percent of salary; a $25,000 relocation stipend;
and, eligibility for additional stock options at Zipcar's
the Employment Agreement, Smith was an at-will employee. His
contract provided for severance payments under two scenarios.
If Smith resigned for " Good Reason" or was fired
without cause before a " Change of Control," he
would receive 6 months' salary, or $145,000. If, however,
he resigned for Good Reason or was terminated without cause
after a Change of Control, he would receive a year's
salary, plus his targeted bonus, amounting to 1.5 years of
pay, or $435,000. " Change of Control" was defined,
in relevant part, as " the sale of all or substantially
all of the capital stock." Exh. 14. Good Reason was
defined, in relevant part, as " a material adverse
change in your office, duties, salary, benefits or
responsibilities made without your prior written
consent." Id. Under the contract, Smith was
required to " set forth in specific detail the facts
supporting" his reasons for separating. Id. If
Zipcar adequately " cured" those issues within 30
days, then Smith would be deemed to have resigned without
to Plaintiff, at the time he accepted the CTO job, Zipcar was
in discussions with several different companies about
financing options. Some of these corporate suitors simply
wanted to make an equity investment in Zipcar; others wanted
to buy the company outright. On November 17, two days after
Plaintiff was first offered employment, Avis sent a letter to
Zipcar expressing its interest in acquiring the company. At
the same time that Plaintiff was negotiating his compensation
package, Zipcar's lawyers and investment bankers were
performing due diligence on Avis, as well as nine other
companies: two executed confidentiality agreements, and seven
others showed informal interest. On December 31, 2011, twenty
days after Smith's employment agreement was signed,
Zipcar and Avis signed a merger agreement.
following morning, on New Year's Day, Zipcar CEO Scott
Griffith reached out to Plaintiff to inform him of the deal.
Plaintiff was surprised, but reaffirmed his enthusiasm for
the CTO opportunity and his intent to commence employment on
January 21. Plaintiff began work as planned. Concurrently, he
engaged in discussions with Corbis, a Seattle-based
technology company, about employment opportunities there.
Plaintiff asked Griffith how the potential deal would affect
his stock options, Griffith assured him that Avis would craft
an alternative, comparable long-term incentive package
(" LTIP" ). To further assuage Smith's
concerns, Zipcar offered to amend his employment contract to
enhance the post-Change in Control severance to 24
months' salary. Counterproposals were exchanged in
mid-February but an agreement was not reached. Frustrated
that details of the alternative package had yet to
materialize, and apparently unsatisfied with the enhanced
severance offer, on March 5, 2013, Plaintiff gave notice of
his intent to terminate his employment for Good Reason. Under
the terms of his Employment Agreement, this triggered the
30-day cure period. In an e-mail to Griffith, Plaintiff
avowed a desire to continue working at Zipcar during the cure
period and a hope that the LTIP issue would be resolved. He
I have every intention of staying engaged for the foreseeable
future and I am open to a period of discussion (we should
discuss that would take, but I'd expect at least 30 days)
around a contract that would work.
(emphasis added). Zipcar, however, terminated Plaintiff's
employment on March 8, 2013. Plaintiff responded four days
later by filing this lawsuit. In April 2013, Smith commenced
employment at ...