Andrew Segal, M.D.
H. Fisk Johnson, III et al No. 134301
D. Wilson, Justice
FINDINGS OF FACT AND RULINGS OF LAW CONCERNING
PLAINTIFF'S REQUEST FOR TREBLING OF A PORTION OF THE
lawsuit, Plaintiff Andrew Segal, M.D. sued his former
employer Genitrix, LLC, as well as several persons associated
with Genitrix. When the case reached trial, after years of
litigation in Delaware and in Massachusetts (which included
trips to the appellate courts of both states), Segal's
only remaining claims were his Wage Act claims against
Defendants H. Fisk Johnson, III and Stephen Rose. In those
claims, Segal contended that Johnson and Rose were "
officers or agents having the management" of Genitrix,
and therefore were personally liable to him for his unpaid
wages under M.G.L.c. 149, § 148.
presided over an eight-day jury trial on these claims in
November 2015. The jury returned a verdict in favor of
Plaintiff in the total amount of $398, 892. Because the
legislature amended the Wage Act as of July 12, 2008 to make
treble damages mandatory, and the period of unpaid damages
began before that date, the jury verdict slip asked the jury
to break the damages down into amounts attributable to the
period before July 12, 2008, as to which the jury awarded
$231, 250, and the period July 12, 2008 and thereafter, as to
which the jury awarded $167, 642.
to the amendment making treble damages mandatory, Wage Act
damages were trebled if the defendant's conduct was
" outrageous, because of the defendant's evil motive
or his reckless indifference to the rights of others."
Wiedmann v. Bradford Group, Inc., 444 Mass. 698,
710, 831 N.E.2d 304 (2005), quoting Dartt v.
Browning-Ferris Industries, Inc. ( Mass. ), 427
Mass. 1, 17, 691 N.E.2d 526 (1998). Evidence of "
outrageous" behavior relating to " evil motive or .
. . reckless indifference" was relevant only to the
trebling question, and such evidence might have unfairly
prejudiced Johnson and Rose as the jury decided their
liability. Therefore I bifurcated the trial, reserving to
myself the obligation to decide, if necessary, whether the
evidence justified trebling of pre-July 12, 2008 Wage Act
damages under the Wiedmann standard.
December 22, 2015, without a jury, I presided over the second
phase of the trial, concerning this question. The only live
witness during the second phase was Segal, but the parties
also introduced deposition testimony of Johnson, Rose, and
David Ford, the accountant who liquidated Genitrix after
being appointed for that purpose by the Delaware Chancery
conclusion of the evidence, I established a schedule for
post-trial briefing, which contemplated that such briefing
would be concluded in late January. However, the parties
continued to file additional motions and briefs, most
recently a sur-reply memorandum filed on June 1, 2016.
my Findings of Fact and Rulings of Law on the live testimony
and deposition testimony presented during both phases of the
trial, as well as the 80 exhibits introduced during the two
phases of the trial.
on all the credible evidence, and the reasonable inferences
drawn from that evidence, I find following facts.
late 1990s, Segal, a physician-scientist, was doing cancer
research. He was attempting to develop a molecule that would
teach the immune system to attack cancer cells. He developed
some intellectual property, including patents, in this area,
and he now began seeking investors to fund further
development of his research. As result of a program at the
Massachusetts Institute of Technology that connected
scientists with investors and entrepreneurs, Segal made
contact with representatives of Johnson, who was the Chief
Executive Officer of a very large family company. Johnson was
using some of his own money to invest as venture capital.
Rose, an employee of the " family office" of the
Johnson family, oversaw those investments for Johnson.
negotiation ensued, in which both Segal and Johnson were
represented by competent counsel. The result was the
formation of Genitrix, a Delaware limited liability
corporation formed by Segal and Johnson on September 11,
1997. Genitrix had other members, brought to the entity by
both Segal and Johnson, but their ownership interests were
small compared to the interests of Johnson and Segal. Segal
contributed intellectual property to Genitrix which the
parties valued at $500, 000, but no cash. Johnson contributed
most or all of the initial cash capital.
governing body of Genitrix was the Board of Member
Representatives (the " Board"). Segal and Johnson
each had the right to appoint two members of the Board. Segal
appointed himself as one of his representatives on the Board,
and served in that role until Genitrix was dissolved. Johnson
appointed himself as one of his two representatives on the
Board, a position he gave up about two years later.
Throughout most or all of the history of Genitrix, Rose
served on the Board as one of Johnson's representatives.
All parties to this lawsuit understood that Rose, who was
much more active at Genitrix than Johnson, spoke for Johnson
in dealing with Segal and Genitrix. In fact, Johnson so
informed Segal in writing as to at least one issue.
day Genitrix was formed, Segal signed an employment agreement
with Genitrix, which made him the Chief Executive Officer, at
an annual salary of $75, 000. (In July 2003, the Genitrix
Board increased Segal's salary to $150, 000.) The
agreement provided that Segal could be terminated for cause
by a vote of 50 percent of the Board (that is, by the Johnson
Board members alone), or without cause by a vote of 75
percent of the Board. Johnson was expressly deemed to be a
third-party beneficiary ...