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Gordon v. Connected Living

Superior Court of Massachusetts, Norfolk

June 28, 2018

Janice GORDON et al.
v.
CONNECTED LIVING et al.

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

          Rosalind H. Miller, Justice Superior Court

         The plaintiffs Janice Gordon and Thomas Racca bring this action for retaliation against the defendants Connected Living and its Chief Executive Officer, Sarah Hoit (Count I). The plaintiffs also bring claims for tortious interference against Hoit (Count III) and breach of the implied covenant of good faith and fair dealing against Connected Living (Count IV). Racca separately alleges that Connected Living breached its employment agreement with him (Count II). The matter is now before the Court on the defendants’ motion for partial summary judgment on Counts I, III, and IV. For the reasons that follow, the defendants’ motion is DENIED.

         BACKGROUND

         The following facts are undisputed.

         Connected Living ("CL") is a company that sells services and technology designed to connect seniors to their families and friends. The company was co-founded by Christopher McWade and Sarah Hoit, and Hoit serves as its CEO. CL is governed by a board of directors on which, during all relevant times, both McWade and Hoit were members.

         In 2010, CL received a federal grant to establish broadband technology at affordable housing communities. When the technology was installed, CL developed the "Connected Living Center" ("the Call Center") which was an 800 number help-line which clients could call seven days a week for any type of support. As operations grew, CL tasked specific staff with ensuring coverage of the Call Center. CL classified all employees, including those that worked for the Call Center, as exempt workers and paid them a salary.

         In May 2012, Racca joined CL as a consultant to work on strategic marketing, publicity and sales efforts, and streamlining product priorities. After a few months as a consultant, CL hired Racca as its Chief Operating Officer. The parties executed an employment agreement and Racca began his position as COO on September 4, 2012.

         As COO, Racca authored a 100-day plan for the company and began assessing its strengths and challenges. During his review of company operations, he learned that CL’s then Executive Vice President of Sales had not been paid long accrued commissions by CL. He raised this issue with CL’s Comptroller Patti Holbrook who was not aware of the legal implications. Racca then sought to have two other personnel issues reviewed.

         In October 2012, Racca reached out to Gordon, a colleague with knowledge and experience in human resources, to do a preliminary review of CL’s organizational structure to ensure CL was in compliance with federal and state employment laws. Gordon interviewed Holbrook and Neil Sullivan, Vice President of Customer Experience and Social Impact, as part of her review. During her interview with Holbrook, Gordon expressed her concern that CL employees who took customer service calls after hours could pose a risk to the company due to potential violations of the wage and overtime laws. Holbrook advised Gordon that the employees were classified as exempt and therefore did not receive overtime.

         Based on her interviews, Gordon drafted a "Human Resources Primary Review" in which she outlined a number of HR practices that appeared to fall short of best practices from a compliance perspective as well as issues with accounting and management of sales commissions that could expose CL to legal risks. The report noted that CL did not consistently track employees’ vacation and personal time. With regard to salary classifications, the report stated: "Salary job classifications-out of compliance: This presents a potential high legal risk and substantial fines can be imposed for violations of appropriate payment of overtime for nonexempt (FLSA) employees. CLC employees in particular fall into this category."

         In January 2013, Gordon joined CL as Vice President of Corporate Organization and Development. After being hired, Gordon researched the potential misclassification of CLs employees on the Department of Labors website. She also reviewed employees’ offer letters and discussed their job responsibilities with their respective bosses. Gordon told Racca that she believed two employees, Darren Noisette and Bridgette David, were misclassified as exempt employees.

         David was a salaried employee for CL who was also required to answer calls for the Call Center between 6:00 p.m. and 9:00 p.m. She was not compensated for those additional hours. In March 2013, Gordon spoke with David about her work hours and compensation. David told Gordon that she felt it was a "burden" to take calls at night on the weekends. Noisette and some other employees also had concerns about working twelve-hour days. After Gordon discussed the matter with Racca, Racca told her that he raised the issue previously with McWade and Hoit in October 2012, and they told him that these employees were exempt and therefore not paid overtime. Gordon then met with Hoit and strongly suggested that she look into David’s classification. Hoit did not believe it was necessary to do so. During a subsequent meeting with Hoit and Racca, Gordon again raised her concerns. Thereafter, David was informed that CL would not raise her salary.

         In April 2013, Gordon reviewed the list of employees eligible to receive health and dental insurance through CL. She discovered that since 2011, the Chairman of CL’s Board of Directors Lawrence Rosenfeld was listed as a covered employee and receiving full health benefits for his family. Rosenfeld, however, was not an active employee eligible for insurance based on the contract CL had with its insurer. Gordon spoke with Holbrook about this discovery, and Holbrook admitted she was unaware of the arrangement. Gordon raised her concerns with Hoit, but Rosenfeld continued to receive health benefits. Gordon then contacted CL’s insurance broker who confirmed that Rosenfeld was not supposed to be receiving health insurance and told Gordon that the arrangement was in violation of the Massachusetts Fair Share Contribution laws. Gordon forwarded this information to Racca who spoke with McWade and Hoit about the issue and then with Rosenfeld directly to no avail. Gordon then refused to sign the insurance renewal application confirming a list of eligible employees that included Rosenfeld.

         On May 2, 2013, Racca attended a CL Board meeting. The parties dispute what happened at the board meeting, but one member of the board testified that after hearing the issues Racca raised at the board meeting, he felt "vulnerable" to personal liability as a fiduciary of the company. He recommended that Hoit be promoted to Chairman and that Racca assume the position of CEO ...


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