United States District Court, D. Massachusetts
JUSTIN B. SULLIVAN, Plaintiff,
DUMONT AIRCRAFT CHARTER, LLC, DUMONT AVIATION, LLC, and KEVIN WARGO, Defendants.
MEMORANDUM AND ORDER
DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE.
Justin B. Sullivan, a former employee of Dumont Aircraft
Charter, LLC, brings this lawsuit against his former
employer, its affiliate, Dumont Aviation, LLC, and the owner
of the businesses, Kevin Wargo (together
“Defendants” or “Dumont”). Mr.
Sullivan claims that the Defendants failed to pay him
compensation for the work he did. The Defendants have
responded with counterclaims against Mr. Sullivan, in which
they contend Mr. Sullivan has unlawfully retained money he
did not earn. Both parties have moved for summary judgment on
Mr. Sullivan's claims. For the reasons explained below, I
will grant in part and deny in part each motion.
Kevin Wargo is a director and co-owner of
the Dumont Group, LLC, a non-party to this litigation.
Defendants Dumont Aircraft Charter, LLC and
Dumont Aviation, LLC, are both wholly-owned
subsidiaries of the Dumont Group. The Defendants manage and
operate charter flights on Federal Aviation Administration
Part 135 certificates. These certificates permit an operator
to sell charter flights on a particular plane to customers.
Dumont generally receives a percentage of the revenue,
typically around 10%, from charters sold on aircrafts they
operate and manage, although it does not receive revenue from
every such charter.
Plaintiff Justin B. Sullivan made his living in the aircraft
charter industry as a broker. For a time, before he was
engaged as an employee, Mr. Sullivan worked as a broker
selling charter to the Defendants.
Mr. Sullivan's Pre-Employment Interactions with the
The Cook Plane and Charter Commissions
August 2015, three months before Mr. Sullivan became an
employee of Dumont, he introduced a potential aircraft
customer, Gregg Cook, to Kevin Wargo. Based on this
introduction, Mr. Sullivan and Dumont agreed that Dumont
would pay Mr. Sullivan $50, 000 if Mr. Cook purchased an
aircraft from Dumont, and that Mr. Sullivan would receive 5%
of future charter sales on the aircraft. This agreement was
wholly separate from any employment relationship and did not
identify any further responsibilities, conditions, or duties
that Mr. Sullivan needed to perform in order to be entitled
to the 5% commission. The understanding of the parties with
respect to the 5% commission was also not part of any written
agreement and the agreement did not include a specific end
date for residual commissions.
Cook signed an agreement to purchase the aircraft from Dumont
Aircraft Sales, LLC, a subsidiary of the Dumont Group, in
August 2015, and he paid a deposit at that time. On November
1, 2015, Falcon 50-054, LLC (“Falcon”), an entity
controlled by Mr. Cook, purchased an aircraft with tail
number N954DP from Dumont Aircraft Sales, LLC, a Dumont
affiliate that is not a defendant in this case. Falcon also
signed an agreement to pay Dumont Aircraft Charter, LLC, a
15% charter commission on flight charges. The Cook aircraft
was placed in the Defendants' charter fleet, where it
would be made available to the public for charter flights.
The Cook plane ceased to be part of the aircraft charter
program on August 22, 2017.
November 6, 2015, the Defendants gave the Plaintiff a check
for $50, 000, in accordance with their agreement regarding
purchase of the Cook plane.
December 31, 2015, the Defendants paid Mr. Sullivan his first
residual commission payment, in the amount of $3, 772, for
the November revenue generated by Mr. Cook's plane. On
January 19, 2016, Kevin Wargo instructed Keith Wargo, the
Chief Financial Officer (“CFO”) for Dumont, to
continue paying Mr. Sullivan the 5% commission for charter
sales of Mr. Cook's plane. On January 31, 2016, the
Defendants paid Mr. Sullivan his second residual commission
payment, in the amount of $11, 527.78, for December 2015
charter revenue generated by the Cook plane.
the November and December 2015 commission payments were paid
as W-2 wages with applicable withholdings. On February 18,
2016, Kevin Wargo instructed Keith Wargo, the CFO, not to pay
any further commissions to Mr. Sullivan. Dumont,
nevertheless, continued to collect charter revenue from the
Cook plane from January 1, 2016 through August 22, 2017, when
the Cook plane left the Defendants' charter program.
The Selldorff Aircraft Sale
Mr. Sullivan became an employee of the Defendants, he also
introduced the Defendants to a second potential aircraft
buyer, Frank Selldorff. Mr. Sullivan tried to encourage Mr.
Selldorff to purchase a particular Dumont aircraft, with
registration number N957DP. Mr. Selldorff decided not to
purchase that plane. Though Mr. Sullivan did not broker the
sale of a different aircraft to Mr. Selldorff, he remained in
contact with Kevin Wargo about Mr. Selldroff's plans
after the introduction had been made. For example, on
September 2, 2015, Mr. Sullivan emailed Kevin Wargo to let
him know that Mr. Selldorff seemed to be “narrowing in
on a 601.” Just over one month later, Mr. Selldorff
came back to Dumont and purchased a Challenger 601 from
Dumont Aircraft Sales, LLC. The sale closed on October 14,
Mr. Sullivan's Employment with Dumont
September 2015, Mr. Sullivan and the Defendants began
discussions about Mr. Sullivan formally joining Dumont as an
employee. During the conversations regarding his employment,
Mr. Sullivan and Mr. Wargo negotiated the terms of Mr.
Sullivan's compensation structure via email and during an
in-person meeting. In the electronic communications, Mr.
Wargo never enumerated any deductions or withholdings from
Mr. Sullivan's commission payments for costs or expenses
of any kind. However, in an email exchange from September 14,
2015, Kevin Wargo asked Mr. Sullivan about “ongoing
expenses” for Mr. Sullivan's business and, in an
email dated September 25, 2015, the parties contemplated a
number of “ongoing expenses, ” including
compensation for Maria White, Mr. Sullivan's associate.
terms of Mr. Sullivan's employment were set forth in a
written agreement (“the Term Sheet”) that Mr.
Sullivan signed on October 19, 2015. His employment as the
Sales Director for Dumont formally began on November 4, 2015.
The Term Sheet
parties agree that the terms of Mr. Sullivan's employment
were largely governed by the Term Sheet, which the Defendants
authored. In its initial draft, the Term Sheet contained no
provisions regarding expenses. The final version included one
provision regarding expenses, noting that Mr. Sullivan's
reasonable travel expenses were to be covered by the
Defendants. After several discussions and email
communications regarding a structure for compensation, Mr.
Sullivan and Dumont ultimately agreed to and signed a written
Term Sheet agreement, which set out the terms of Mr.
Sullivan's employment with Dumont and his commission-only
compensation structure. Mr. Sullivan specifically requested
that he be compensated by sales commission only. He did not
ask to be paid by the hour.
Sullivan received an offer letter from the Defendants, which
he signed and returned by November 4, 2015. That offer letter
incorporated the Term Sheet by reference, noting that Mr.
Sullivan's “initial compensation package includes
financial compensation based on the agreement signed October
19, 2015.” It also made clear that Mr. Sullivan's
start date for employment was November 4, 2015 and that his
employment was at-will.
Term Sheet further provided that Mr. Sullivan would be
eligible for a commission on aircraft charter flight sales.
Specifically, the Term Sheet made clear that “[t]hree
percent of gross flight charges revenue sales will be
allocated as sales department commissions. Justin may receive
up to 75% of this number leaving 25% to be split amongst the
remaining team. Under mutual agreement . . . Justin can opt
to reduce his share of the profit.” Any commission not
paid to Mr. Sullivan was retained by the Defendants.
commission was calculated based on flight charges, which were
determined when a customer accepted a flight quote and the
Defendants added it to the flight schedule. Flight charges
were reported to owners in monthly statements issued by the
20th of the month following the flight activity.
Flight charges typically did not change unless there was an
issue with the flight or the routing changed. Mr.
Sullivan's commission, then, was calculated by adding up
flight charges and paying him the agreed percentage. He
received paychecks from Dumont Crewing Services, LLC and
Dumont Aircraft Charter, LLC.
to the Term Sheet, Mr. Sullivan was also entitled to a
commission on aircraft sales of “50% of aircraft sales
profit, up to $100, 000, for closing aircraft sales.”
The Term Sheet defined “closing aircraft sales”
as follows: “Customer is brought by Justin, worked by
Justin, brought thru the process by Justin, and Justin
receives the signed contract, and the transaction
Term Sheet included no reference to costs, expenses, or other
money to be deducted from Mr. Sullivan's commission.
Mr. Sullivan's Role as Sales Director
Sales Director, Mr. Sullivan's duties involved proactive
outreach to prospective aircraft buyers to discuss aircraft
sales opportunities. Mr. Sullivan also provided quotes to
customers, engaged with brokers about potential charters, and
monitored air charter boards. He regularly solicited
customers over the internet and by phone. Mr. Sullivan worked
from his home in Massachusetts much of the time that he was
employed by the Defendants. He also traveled to numerous
states, including Florida, New York, New Jersey, and
Connecticut, to visit aircraft sales clients or for business
conferences. Mr. Sullivan rarely traveled to Delaware, where
the Defendants are located, making only five or six trips
Sullivan does not have records of how many hours he worked
per day, week, or month because he did not keep track of his
hours. However, he estimated that he worked approximately 250
hours per month based on the timestamps on his emails. As an
employee of Dumont, Mr. Sullivan also booked charter flights
for the Defendants.
November 4, 2015 to December 31, 2015, Mr. Sullivan worked
for the Defendants without receiving payment — whether
in the form of wages for in his role as Sales Director or in
the form of commissions for the Cook plane. The Defendants
paid Mr. Sullivan's portion of sales department
commission on charter flights for this period in February
2016. Specifically, around February 15, 2016,  the Defendants
paid Mr. Sullivan two-thirds of the sales department
commissions for November and December 2015, in the amount of
$7, 523.59. The Term Sheet indicated that Mr. Sullivan would
be entitled to up to 75% of the sales department commissions
and, on December 29, 2015, Keith Wargo wrote an email
indicating the commission calculation was 75%. Between
November 4, 2015 and February 16, 2016, Mr. Sullivan and the
Defendants never agreed to modify the terms of Mr.
Sullivan's commission structure.
Defendants did not pay any commissions, including for sales
of charter flights, to Mr. Sullivan for the period between
January 1, 2016 and February 16, 2016. Mr. Sullivan was also
not paid any commissions for any charter flights that were
booked after December 31, 2015.
Maria White & Deductions from Mr. Sullivan's
was engaged as an employee with the defendants, Mr. Sullivan
introduced a prospective employee, Maria White, to the
Defendants. The Defendants hired Ms. White to perform flight
operations work. Ms. White was paid an annual salary of $60,
000 in bi-weekly installments. She also received employee
benefits from the Defendants, including health and dental
insurance. The Defendants deducted $12, 500 from Mr.
Sullivan's commission payments in order to cover the
wages and benefits for Ms. White despite the fact that there
was no written agreement between Mr. Sullivan and the
Defendants that authorized this. Mr. Sullivan objected to
this deduction on February 10, 2016 in an email to Keith
Wargo. He maintains that he and the Defendants never
discussed that he would pay for Ms. White's salary or
benefits out of his commission. Kevin Wargo testified that he
spoke with Mr. Sullivan and obtained his authorization to
deduct the cost of Maria White's salary from Mr.
Sullivan's commission. After Mr. Sullivan's
employment with the Defendants ended, Ms. White continued to
work for them.
The Saperstein Sale
Mr. Sullivan's employment with Dumont, Guy Saperstein, a
prospective aircraft buyer, signed an agreement to purchase
an aircraft from Dumont and paid a non-refundable deposit of
$250, 000. This sale never closed, and Mr. Saperstein
ultimately filed a lawsuit against Dumont seeking a refund of
his deposit. The deposit was paid to the owner of the
aircraft, through Dumont, and spent on customizing the
aircraft to Mr. Saperstein's specification. The
Defendants were involved in other transactions with this
plane, and they ultimately sold the improved plane to another
Lyon Aviation Flights
Dumont started its charter business, it struck an agreement
with another aircraft charter company, Lyon Aviation
(“Lyon”), to book charter flights with Lyon. At
that point, Dumont had not yet received its charter company
certificate, and it was seeking to build a client base for
its charter business. During Dumont's
“start-up” period, it was willing to earn no
money on flights in order to build a loyal client base, and
so Dumont generated no profit on Lyon charter bookings prior
to January 1, 2016.
time Mr. Sullivan joined Dumont, Dumont had only one plane on
its own Part 135 charter certificate, and the other planes
Dumont considered in its “fleet” were on
Lyon's charter certificate. Lyon's charter
certificate covered approximately 12 planes. During Mr.
Sullivan's employment, in emails with Kevin Wargo, Mr.
Sullivan referenced their agreement, indicating that he
expected to be compensated on the Lyon bookings. The
Defendants did not object to this understanding or correct
Mr. Sullivan's impression. In fact, Mr. Sullivan was
instructed to ease up on booking flights on planes on
Lyon's certificate because he was already being
compensated on these flights and the increased wear on the
planes could lead to maintenance problems. Moreover,
representatives from Lyon and Dumont met during Mr.
Sullivan's employment and agreed that Lyon would receive
revenue when a charter was sold on a plane on their
certificate and that Mr. Sullivan would be commissioned
regardless of who sold the trip or what certificate the
charter flew on.
Defendants did not calculate the charter commission portion
of Mr. Sullivan's commission until after they had
developed concerns with Mr. Sullivan's performance. At
that point the Defendants excluded Lyon bookings from Mr.
Sullivan's charter commission. Before that point,
however, the Defendants had paid Mr. Sullivan for some
charter activity on planes on Lyon's certificate.
Defendants collected gross flight charge revenue from charter
customers and reported this income to plane owners on monthly
customer statements. This revenue was reflected under
“Aircraft Income” on monthly statements,
regardless of whether the plane was on Lyon's or
Dumont's certificate. In addition to collecting gross
flight charges, building a client base, and keeping
individual plane owners happy with high plane utilization,
Dumont also received monthly income from owners for each
plane in its fleet, including those on Lyon's
certificate. The monthly income included a monthly hangar
rent of $4000 and a monthly management fee of $4000. In
addition, flying charters added wear and tear to the planes,
which generated maintenance income for Dumont.
Owner Flights, Dry Leases, and Other Revenue
“owner” flight, when a person who owns an
aircraft books a charter flight on that aircraft, does not
generate any revenue for Dumont. The owner of the aircraft
pays only the operating costs and expenses related to the
flight. Because Mr. Sullivan was only entitled to a
commission if a flight generated revenue, he was not entitled
to, and does not seek, commissions for owner flights.
lease flights, where one owner books a flight on another
owner's aircraft, and all other instances of someone
other than the aircraft's owner flying on their own
plane, is flight activity that is reported to aircraft owners
as aircraft revenue. Any dry lease flights that occurred
during Mr. Sullivan's employment were set up prior to his
start date. Mr. Sullivan did not contemplate whether dry
leases were excluded from the contract when he negotiated the
terms of the employment agreement with Dumont.
Mr. Sullivan's Departure from Dumont
before Mr. Sullivan left Dumont, Dumont discovered that Mr.
Sullivan had accepted a charter client's payment directly
and had failed to remit the entire payment to Dumont. Mr.
Sullivan ultimately paid the balance of the funds owed to
Dumont after Dumont's accounting department discovered
this payment and asked Mr. Sullivan to return the money.
email exchange on February 16, 2016, Mr. Sullivan voluntarily
terminated his employment and the parties outlined an
agreement to separate and move forward. It was Dumont's
understanding that the parties had agreed to part ways
amicably, with no past or future monetary obligations owed by
either side. In this email exchange, Mr. Sullivan did not
mention being owed any commissions or compensation; nor did
he indicate that he was owed commissions in perpetuity after
his employment had ended. However, Mr. Sullivan did indicate
that he believed Ms. White's wages and benefits were
being improperly deducted from his pay and that his
commission statement had excluded significant gross charter
revenue flight activity.
April 13, 2016, Mr. Sullivan filed this action alleging
violations of the Massachusetts Wage Act (the “Wage
Act”) M.G.L c. 149 § 148, the Fair Labor Standards
Act (“FLSA”), 29 U.S.C. § 207, breach of
contract, and unjust enrichment and quantum meruit. After the
Defendants filed a motion to dismiss, I allowed Mr. Sullivan
to file an amended complaint.
April 11, 2017, Mr. Sullivan filed a motion to compel the
Defendants to comply with discovery, alleging that the
Defendants had refused to produce documents necessary to
calculate his unpaid commissions. On April 25, 2017, I
referred the case to Magistrate Judge Donald L. Cabell. Judge
Cabell heard argument from the parties concerning the motion
to compel discovery, and on May 26, 2017, he ruled that the
motion should be allowed in part and denied in part.
5, 2017, Mr. Sullivan filed a motion for sanctions under Rule
37 because the Defendants had failed to produce owner
statements, records of flight activity, and other relevant
discovery materials. The Defendants filed an opposition on
July 26, 2017. On September 12, 2017, Judge Cabell granted
the motion for sanctions, ordering the Defendants to pay Mr.
Sullivan's “reasonable fees incurred in filing the
motion for sanctions.” On September 26, 2017, the
Defendants filed an objection to Judge Cabell's order.
February 16, 2018, the Defendants filed a motion for partial
summary judgment, requesting summary judgment in their favor
on “each of Counts I through V.” The same day, Mr.
Sullivan filed a motion for partial summary judgment on
Counts I, II, and III, and sought dismissal of the
March 9, 2018, Mr. Sullivan filed a motion to strike the
Defendants' motion for summary judgment on two grounds.
First, Mr. Sullivan requested that the Defendants' motion
be stricken to the extent it exceeded twenty pages.
Alternatively, Mr. Sullivan requested that the motion be
stricken in its entirety because the Defendants' counsel
failed to meet and confer with Mr. Sullivan's counsel
prior to filing the motion. On March 23, 2018, the Defendants
filed an opposition to the motion to strike.
13, 2018, I held a hearing on the motions for summary
judgment and Mr. Sullivan's motion to strike. Recognizing
the complexity of the factual record in this case, I sought
further briefing from the parties with respect to certain
elements of the factual record. The parties thereafter filed
objection to Judge Cabell's order, the motions for
summary judgment, and the motion to strike are now ripe for
review and resolution by me. I will first address the motion
to strike because its disposition frames how I approach the
motions for summary judgment. I will then turn to the motions
for summary judgment. Finally, I will address the
Defendants' objections to Judge Cabell's order.