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DeMego v. Nisonson

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 23, 2017

Marie DeMego et al. on Behalf of Themselves and All Others Similarly Situated
v.
Evan Nisonson et al No. 137199

          Filed May 25, 2017

          MEMORANDUM AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT AND PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

          Kenneth W. Salinger, Justice

         The Plaintiffs assert claims for unpaid wages against directors and former executives or other employees of ConnectEDU, Inc., which has filed for bankruptcy. Defendants have moved for summary judgment on all claims asserted against them by the Plaintiffs and on all cross claims asserted against them by other Defendants. Plaintiffs have moved for summary judgment on their claim for unpaid accrued vacation time and on the claim by Manuel Rodriguez and Tonya Chin for unpaid commissions; they do not seek summary judgment on Maria DeMego's claim for unpaid commissions. In addition, Plaintiffs move to certify a class of former ConnectEDU employees with respect to the unpaid vacation claim.

         The Court will allow Evan Nisonson's motion for partial summary judgment, allow Alan Bowers' motion for summary judgment as to all claims against him, allow in part Paul Sheppard's motion for summary judgment with respect to Ms. DeMego's claim for commissions for 2012, and allow in part the motion for summary judgment by Thomas Riley, Richard Dresdale, Jay Sarles with respect to the various cross claims among Defendants for indemnification and contribution. It will deny the rest of Mr. Sheppard's summary judgment motion, deny the rest of the motion for summary judgment by Riley, Mr. Dresdale, Sarles, and Beth Dresdale, and deny Plaintiffs' cross motion for summary judgment. Finally, the Court will allow Plaintiffs' motion to certify a class with respect to the claim for accrued but unpaid vacation time. It will also schedule a final pre-trial conference.

         1. Summary of Claims

         Ms. DeMego, Mr. Rodriguez, and Ms. Cynn all worked for a company called ConnectEDU, Inc. They and other company employees were fired on April 28, 2014, roughly four hours before ConnectEDU filed a voluntary petition for bankruptcy.

         DeMego, Rodriguez, and Cynn assert two sets of claims under the Massachusetts Wage Act. (G.L.c. 149, § § 148 & 150) against seven individuals who are or were employees or directors of ConnectEDU. First, on behalf of themselves and other employees who were fired by ConnectEDU, they claim that they are owed payment for accrued but unused vacation time. Second, Plaintiffs also claim that they are owed unpaid commissions. DeMego says that she is still owed commissions for 2012 and 2013, which she says should have been paid during the first quarters of 2013 and 2014 respectively. Rodriguez and Cynn only seek commissions for 2013, which they say were due to be paid during the first quarter of 2014. This second claim is not asserted on behalf Of any putative class.

         Many of the Defendants have asserted cross claims against each other for indemnification and contribution, in the event they are found to be liable.

         2. Legal Background--Personal Liability under the Wage Act

         By statute, " [t]he president and treasurer of a corporation and any officers or agents having the management of [a] corporation shall be deemed to be the employers of the corporation" for purposes of applying the Wage Act, See G.L.c. 149, § 148. This means that a corporate officer or manager " who 'controls, directs, and participates to a substantial degree in formulating and determining' the financial policy of a business, entity" is personally liable for non-payment of wages. Cook v. Patient Edu., LLC, 465 Mass. 548, 549, 989 N.E.2d 847 (2013) quoting. Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 711, 831 N.E.2d 304 (2005).

         " Merely holding a managerial position over some branch, division, or office of a corporation does not, by itself, mean that that manager has the 'management' of the 'corporation' as a whole, " however. Wiedmann, supra, at 712. Someone who has " a management role" in a corporation is not personally liable for non-payment of wages if they have not " directed and participated to a substantial degree in formulating the corporation's policy." Id.

         3. Cross Motions for Summary Judgment

         3.1. Plaintiffs' Wage Act Claims

         3.1.1. Evan Nisonson

         Nisonson was the president and chief executive officer of ConnectEDU from May 2013 until he was fired on April 28, 2014. He seeks and is entitled to partial summary judgment in his favor with respect to Plaintiffs' claims (and any related cross claims) for wages that became due before he joined ConnectEDU or after he was fired. This disposes of Marie DeMego's claims for commissions in 2012 and of 'Plaintiffs' claims for accrued but unpaid vacation time. Plaintiffs seek summary judgment against Nisonson with respect to commissions that became due and payable while he worked for ConnectEDU. That part of Plaintiffs' motion must be denied because those claims turn on disputed issues of material fact.

         Nisonson is entitled to summary judgment as to DeMego's claim for 2012 commissions because those amounts all became due on or before March 15, 2013, and it is undisputed the Nisonson did not start working for ConnectEDU until May 16, 2013. DeMego claims that the commission amounts she was paid in November 2012 and March 2013, for the third and fourth quarters of 2012, were too low. But Nisonson cannot be held liable for that, because he had not yet joined the company. Plaintiffs have not produced any evidence that Nisonson was personally involved in, or even that he had ultimate responsibility for, any decision made after Nisonson's arrival to withhold commissions claimed by DeMego. Nothing in the Wage Act or in appellate decisions construing the statute indicates that someone newly hired as the president of the company becomes personally liable on their first day on the job for all wages that were allegedly earned but not paid before that time.

         Nisonson is also entitled to summary judgment as to Plaintiffs' claims for unpaid vacation time because those amounts did not become due until after Nisonson had been fired and left the company. It is undisputed that Plaintiffs were not entitled to be paid for accrued vacation time until their employment was terminated on April 28, 2014. It is also undisputed that Nisonson was fired several hours before other employees and that he had no personal involvement in the decision to fire others or not to pay out the former employee's accrued vacation. Since Nisonson was no longer president at the time those sums became due and payable, he cannot be held personally liable under the Wage Act. Cf. G.L.c. 149, § 148.

         Plaintiffs make the policy argument that managers of a corporation should not be able to escape personal liability under the Wage Act by arranging to be fired on the eve of a bankruptcy filing before employees have been compensated for accrued but unpaid leave. But they point to no evidence that Nisonson somehow conspired to get fired in order to cutoff personal liability under the Wage Act. And, in any case, the Court may not rewrite the statute in order to eliminate a potential loophole in the personal liability provision. See generally Provencal v. Commonwealth Health Ins. Connector Auth., 456 Mass. 506, 516, 924 N.E.2d 689 (2010) (courts may not " read into the statute a provision which the Legislature did not see fit to put there, whether the omission came from inadvertence or of set purpose") quoting General Elec. Co. v. Department of Envtl. Protection, 429 Mass. 798, 803, 711 N.E.2d 589 (1999)).

         Finally, Plaintiffs claim that they are owed commissions for sales made in 2013 and 2014 cannot be resolved on a motion for summary judgment. A Commission is subject to the Wage Act once it " has been definitely determined and has become due and payable." G.L.c. 149, § 148. In this case there are disputed issues of fact regarding what commissions if any are owed for 2013 and 2014, whether and when such commissions could be definitely determined, and whether and when they became due and payable.

         3.1.2. ...


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