United States District Court, D. Massachusetts
PETER C. DAVIS, III, and MERRY WHITE, Plaintiffs,
OFFICE DEPOT, INC. and OFFICEMAX INCORPORATED, Defendants. MICHELLE B. SIGEL, Plaintiff,
OFFICE DEPOT, INC. and OFFICEMAX INCORPORATED, Defendants.
MEMORANDUM AND ORDER
Talwani, United States District Judge
Michelle Sigel brings Civil Action No. 16-cv-11823-IT for
claims arising out of her former employment with Defendants
Office Depot, Inc. (“Office Depot”) and OfficeMax
Incorporated (“OfficeMax”). Plaintiffs Peter C.
Davis, III, and Merry White bring Civil Action No.
16-cv-11783-IT for similar claims arising out of their former
employment with Defendants. In both actions, Defendants have
moved to dismiss Plaintiffs' claims of fraud and unjust
enrichment. For the following reasons, Defendants'
Motion to Dismiss Counts V and VI of Plaintiffs'
Second Amended Complaint [#43] in Civil Action No.
16-cv-11783-IT and Motion to Dismiss Counts IV and V of
Plaintiffs' First Amended Complaint [#38] in Civil
Action No. 16-cv-11823-IT are DENIED.
operated as a large office products supplier until November
2013 when it was acquired by and became a wholly-owned
subsidiary of Office Depot, also a large office products
supplier. Plaintiffs, who had been OfficeMax employees,
accepted sales positions with Office Depot after the
acquisition. During the course of Plaintiffs' employment,
each company offered Plaintiffs incentive compensation
packages in addition to their base salaries. Davis resigned
from his position in August 2016, and White and Sigel
resigned from their positions in September 2016.
operative complaints allege violation of the Massachusetts
Wage Act,  breach of contract, unjust enrichment, and
fraud. Plaintiffs further seek declaratory judgments that any
restrictive covenants contained in their respective
employment contracts are unenforceable.
grounds for the fraud and unjust enrichment claims,
Plaintiffs allege that, during their tenure with OfficeMax
and Office Depot, each defendant intentionally misrepresented
the manner in which it calculated Plaintiffs' incentive
compensation. Specifically, Plaintiffs allege that Defendants
represented to them in writing that their incentive
compensation was based in part on gross profits from
Plaintiffs' respective sales, or in other words, on the
difference between the prices charged to customers and the
actual cost to Defendants for the products sold. According to
Plaintiffs, despite these representations, Defendants
knowingly inflated the actual costs incurred when calculating
Plaintiffs' gross profits. Plaintiffs allege that, as a
result of these intentional miscalculations, they did not
receive the full amount of incentive compensation to which
they were entitled.
now move, pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, to dismiss the fraud and unjust enrichment
claims. Plaintiffs oppose Defendants'
survive a motion to dismiss brought under Rule 12(b)(6), a
complaint must allege facts sufficient “to state a
claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007); accord Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). In resolving these motions, the court must accept all
factual allegations in the complaints as true and draw all
reasonable inferences in favor of the plaintiffs.
Iqbal, 556 U.S. at 678-79.
Massachusetts law, ‘fraud is a knowing false
representation of a material fact intended to induce a
plaintiff to act in reliance, where the plaintiff did, in
fact, rely on the misrepresentation to his
detriment.'” Smith v. Jenkins, 732 F.3d
51, 62 (1st Cir. 2013) (quoting Fordyce v. Town of
Hanover, 929 N.E.2d 929, 936 (Mass. 2010)).
Additionally, a claim of fraud must satisfy the particularity
requirements set forth in Rule 9(b). Woods v. Wells Fargo
Bank, N.A., 733 F.3d 349, 358 (1st Cir. 2013) (quoting
Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 279-80 (1st Cir.2013)). Under this heightened pleading
standard, a plaintiff must “specify the who, what,
where, and when of the allegedly false or fraudulent
representation.” Alt. Sys. Concepts, Inc. v.
Synopsys, Inc., 374 F.3d 23, 29 (1st Cir. 2004); see
also Fed.R.Civ.P. 9(b) (“In alleging fraud or
mistake, a party must state with particularity the
circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person's mind may be
first argue that Plaintiffs have failed to set forth a
prima facie case of fraud because their claims are
premised on a failure to disclose a material fact. However,
this argument overlooks Plaintiffs' allegations that
Defendants informed Plaintiffs in writing that their
incentive compensation would be calculated in one manner and
then knowingly calculated it another way. This constitutes an
affirmative misrepresentation of material fact, not a failure
next argue that Plaintiffs failed to allege the requisite
fraudulent intent. Specifically, they posit that Plaintiffs
do not allege facts regarding Defendants' “state of
mind.” However, Plaintiffs allege that Defendants
intentionally misrepresented, miscalculated, and understated
their incentive compensation by knowingly inflating the costs
used in the calculation of their gross profits. Since
“[m]alice, intent, knowledge, and other conditions of a