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Smith v. Unidine Corp.

Superior Court of Massachusetts, Suffolk

July 25, 2017

Donald Smith et al.
Unidine Corporation

          Filed July 25, 2017


          Edward P. Leibensperger, Justice

         In this action under the Massachusetts Wage Act G.L.c. 149, § § 148, 150 (the " Act"), the employer, Unidine Corporation, and plaintiffs, former employees, cross move for summary judgment. The principal issue presented is whether the former employees are entitled to recover for the non-payment of commissions and a bonus. The employer says they are not because of the terms and conditions of the governing agreement for calculating and paying commissions and bonuses. The former employees assert that they should be paid the commissions as a matter of law under the Act.[2]

         The resolution of the motion turns on both the terms and conditions of the written agreement regarding commissions and bonuses as well as the terms of the Act. The Act requires the timely payment of wages. Wages include commissions " when the amount of such commissions . . . has been definitely determined and has become due and payable . . ." Id. The terms of the written agreement determine what has been " definitely determined" and what is " due and payable."


         The following facts, drawn from the parties' Statement of Undisputed Material Facts are undisputed.

         Unidine is in the business of providing dining management services to institutional clients such as hospitals, senior living facilities, universities, etc. Unidine employs Directors of Business Development (" DBDs") to sell the services of Unidine and to develop and maintain relationships with client customers as the contracts with the client customers are performed. Plaintiffs, Donald Smith and Matthew Ales, were employed by Unidine as DBDs.[3]

         DBDs earn a base salary and are eligible to participate in Unidine's 2014 Sales Commission and Bonus Plan (the " Plan") subject to its terms and conditions. DBDs, including Smith and Ales, acknowledge and sign the Plan each year. All of plaintiffs' claims arise under the 2014 Plan. The Plan applies to contracts with client customers executed in 2014.

         Smith began work at Unidine on April 14, 2014, as an at-will employee in the position of DBD. He was paid a base salary of $125, 000 per year, and a signing bonus of $25, 000. Smith was terminated from employment on May 29, 2015.

         Ales began work at Unidine on January 3, 2012, as an at-will employee, in the position of DBD. His base salary was $80, 000 per year and was increased to $90, 000 on January 1, 2015. In February 2015, Ales voluntarily resigned from Unidine.

         The Plan

         The Plan provides for the payment of commissions to DBDs subject to its terms and conditions, based upon obtaining and maintaining for one year a new client account for Unidine. Under the Plan, " [c]ommissions will be earned ratably over a twelve (12) month period. As such, commissions will be paid on a monthly basis over the first year following execution (signed by both parties) of the contract and commencement of service by Unidine." Plan ¶ E.[4] The Plan further provides that commission payments " shall commence following the end of the first full month of the account's operation." Id.

         Paragraph E of the Plan lists a number of contingencies that must occur before the first commission payment is due. Among those contingencies are the following:

--execution of a signed contract;
--planning and execution of a transition meeting by the DBD with the client and Unidine operations personnel;
--development of the first Unidine invoice to the client;
--" invoicing and collection of initial Payment . . ." Id. at ¶ E6 (emphasis in original);
--completion of the Commission Worksheet and Commission Submittal Checklist.

         The Plan recognizes that the DBD has a continuing interest in the successful performance of the contract. For example, the Plan allows the company to terminate commission payments if the customer fails to pay any Unidine invoice or accrues an account receivable in excess of the payment terms. Also, if the new account is terminated prior to the completion of twelve (12) months of commission payments, " any commission payments made will be returned to the company over the same number of months as paid as well as any bonus payments. During this period, in the event the Director of Business Development leaves the company for any reason, any commission and/or bonus balance due the company will be due immediately to the company and may be used to off-set any compensation due." Id. [5] Moreover, both Smith and Ales testified in their depositions to the effect that they worked closely with the operations staff and maintained contact with the customer as part of their jobs.[6]

         Finally, the Plan provides that " [t]o be eligible for Commission Payment or bonus the participant must be employed by Unidine at the time the Commission Payment or bonus is processed and paid as described in paragraph E--Commission Payment." Plan, ¶ B.

         With respect to the payment of either a quarterly or annual bonus, the Plan is sparse. In two paragraphs, reference is made to another, unspecified, " plan" which appears to include goals for revenue to be generated by the DBD (although there is no definition of how the revenue targets are set or calculated). If the DBD exceeds the goals by certain percentages (e.g., 125%, 150%, 200%), the DBD is " eligible" for payment of the bonus. The Plan does not explicitly reserve any discretion to the company or its officers as to whether the revenue goals were met or exceeded.

         Facts With Respect to Smith

         Smith's sole claim is that he is owed a commission[7] with respect to a single customer, Southeast Missouri Hospital. It is undisputed that Smith was responsible for the sale of services to the hospital and that he worked to get the operations team set up to have a successful and smooth start-up and launch. The hospital signed a contract with Unidine on November 24, 2014, but dining services were not commenced until March 22, 2015. The hospital paid the initial advance payment on March 24, 2015, and paid the first monthly invoice under the contract on Apri1 20, 2015. After Smith's employment was terminated[8] on May 29, 2015, Unidine sent Smith a check in an amount (Smith concedes) that represents the value of two months of commission payments (April and May). No further commissions were paid to Smith. Accordingly, Smith's claim in this lawsuit is for commissions that he alleges would have been paid to him in the ten months after his termination. In his memorandum in opposition to Unidine's Motion for summary judgment (and in support of his cross motion for summary judgment), Smith states " [w]hile Smith was not employed at the time his commission payment was due, all other contingencies were satisfied." Plaintiffs' Memorandum, p. 10.

         Facts With ...

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