Dinan v. Alpha Networks Inc.

• Decision Date: 15 July 2013
• Docket Number: No. 2:10–cv–00340–JAW.,2:10–cv–00340–JAW.
• Citation: 957 F.Supp.2d 44
• Parties: Michael DINAN, Plaintiff, v. ALPHA NETWORKS INC., Defendant.
• Court: U.S. District Court — District of Maine

957 F.Supp.2d 44

Michael DINAN, Plaintiff,

v.ALPHA NETWORKS INC., Defendant.

No. 2:10–cv–00340–JAW.

United States District Court,

D. Maine.

July 15, 2013.

Patrick S. Bedard, Beard and Bobrow, PC, Eliot, ME, for Plaintiff.

Daniel P. Schwarz, Debra Weiss Ford, Kevin Joshua Scott, Jackson Lewis LLP, Portsmouth, NH, Yung–Ming Chou, Law Office of Yung–Ming Chou, Fremont, CA, for Defendant.

ORDER ON CHOICE OF LAW

JOHN A. WOODCOCK, JR., Chief Judge.

After a federal jury awarded Michael Dinan damages of $70,331.93 in quantum meruit in a lawsuit he brought against his former employer, Alpha Networks, Inc., the parties filed post-trial briefs, requesting the Court to (1) determine whether Maine or California law triggered wage payment penalty provisions and would entitle Mr. Dinan to an increased damages award and attorney's fees, and (2) to clarify, in the event Maine or California wage penalty provisions applied, what damages amount pre-judgment interest would run on. The Court concludes that California law applies to the jury's quantum meruit award and that Mr. Dinan is entitled under California law to an additional award of thirty days wages. Further, the Court orders Alpha to pay Mr. Dinan pre-judgment interest according to Maine Revised Statutes, title 14, section 1602–B.

I. STATEMENT OF FACTSA. The Lawsuit

Michael Dinan filed an amended complaint with the Court on November 8, 2010 against his former employer, Alpha Networks, Inc. (Alpha), for violation of Maine's Timely and Full Payment Wages Law (Maine Revised Statutes, title 26, section 626), breach of contract, breach of quasi-contract, and unjust enrichment. Pl.'s First Am, Compl. (ECF No. 24) ( Am. Compl.). On the third day of trial, the jury returned a verdict and found:

1) That Mr. Dinan had not established that Alpha and he entered into an employment agreement in which Alpha promised to pay him commissions for 2009 and 2010;

2) That Alpha and Mr. Dinan had entered into a valid Separation Agreement and General Release;

3) That Alpha repudiated or breached the Separation Agreement and General Release;

4) That Mr. Dinan had established that he is entitled to damages under quasi-contract;

5) That the reasonable value of the services that Mr. Dinan had established he was entitled to receive from Alpha under quasi-contract was $70,331.93;

6) That Alpha had failed to pay Mr. Dinan his wages, including commissions; and

7) That the value of thirty days wages, including commissions, for Mr. Dinan was $7,799.67.

Jury Verdict (ECF No. 97).

On September 1, 2011, Mr. Dinan filed a motion for the Court to treble the damages and add costs, interest, and attorney's fees to the judgment pursuant to Maine Revised Statutes, title 26, section 626 or to certify the question to the Maine Supreme Judicial Court as to whether Maine's Timely and Full Payment of Wages Law applies to the reasonable value of an employee's services under quantum meruit. Pl. Michael Dinan's Mot. that the Ct. Treble the Damages and Add Costs, Interest and Att'y's Fees to the J. in Accordance with 26 M.R.S.A 626, or in the Alternative to Certify This Issue to the Maine Supreme Judicial Court in Accordance with 4 M.R.S.A. [§ ] 57 (ECF No. 106) ( Pl.'s Mot.). Alpha responded on September 21, 2011. Alpha Networks' Obj. to Pl.'s Mot. that the Ct. Apply Maine Law or Certify the Issue to the Maine Supreme Judicial Ct. (ECF No. 108) ( Def.'s Opp'n ). On September 29, 2011, Mr. Dinan replied to Alpha's opposition. Michael Dinan's Reply Brief to Alpha Networks' Obj. to Pl.'s Mot. that the Ct. Apply Maine Law or Certify the Issue to the Maine Supreme Judicial Ct. (ECF No. 109) ( Pl.'s Reply ).

On April 23, 2012, the Court issued an Order certifying Mr. Dinan's question—whether Maine Revised Statutes, title 26, section 626, applies to an employee's quantum meruit damages award—to the Maine Law Court. Order on Pl. Michael Dinan's Mot. that the Ct. Treble the Damagesand Add Costs, Interest, and Att'y's Fees to the J. in Accordance with 26 M.R.S.A. [§ ] 626, or in the Alternative Certify this Issue to the Maine Supreme Judicial Court in Accordance with 4 M.R.S.A. [§ ] 57

(ECF No. 110) ( Order ). On February 21, 2013, the Maine Law Court issued an opinion concluding that Maine Revised Statutes, title 26, section 626, may apply to employees' quantum meruit awards if the award is for services of the type for which an employee would have been due wages:

Whether a quantum meruit recovery activates the penalty provision of section 626 depends on the first element of a quantum meruit claim: the services rendered. If those services are of the type for which an employee would have been due wages, then application of section 626 to a recovery in quantum meruit is appropriate. If not, section 626 would not apply.

Dinan v. Alpha Networks, Inc., 2013 ME 22, ¶ 2, 60 A.3d 792, 794.

On March 22, 2013, the Court held a telephone conference in which Mr. Dinan and Alpha agreed that given the Law Court's decision, the Court should decide which state's law applies to this case. Minute Entry (ECF No. 114). On March 28, 2013, Alpha filed a memorandum on the choice of law question. Def.'s Mem. on Miscellaneous Damages Issues Raised by the Choice of Law Question Pending Before the Court (ECF No. 115) ( Def.'s Damages Mem.). On April 2, 2013, Mr. Dinan filed a memorandum regarding the appropriate choice of law, damages, interest, and attorney's fees. Pl.'s Mem. of Law on Damages, Interest, and Att'y's Fees (ECF No. 116) ( Pl.'s Damages Mem.).

B. The Underlying Dispute¹

Mr. Dinan worked as a salesman for Alpha, a California corporation, from November 10, 2005 until March 12, 2010. See Order at 2; Def.'s Opp'n at 3. On November 10, 2005, Mr. Dinan signed an Employment Agreement, which contained a California choice of law provision. Order at 2–3; see Def.'s Answer, Affirmative Defenses and Countercl. (Def.'s Answer) Attach 1, Employment Agreement (ECF No. 9–1). The choice of law provision stated:

The terms and conditions contained in this offer letter supersede any other representations made to you, whether oral or written and cannot be changed without the express written approval of an Officer of the Company. The terms of this letter shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. Any term or provision of this letter agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

Employment Agreement ¶ 9. The agreement also included provisions concerning Mr. Dinan's base salary and incentive pay. Order at 3; Employment Agreement ¶ 2.

Alpha initiated a new bonus plan in 2008, which reduced the amount Mr. Dinan and other employees received in incentive pay. Order at 3. The lower bonuses from the plan caused discontent among the salespeople, including Mr. Dinan. Id. In 2009, Alpha promised to adopt a new incentive plan and Mr. Dinan continued to work for Alpha based upon that promise. Id. Yet, despite periodic assurances that it would adopt a new incentive plan for 2009 or 2010, Alpha did not institute a new plan. Id. In recognition of its failure to follow through on its promise, Alpha paid Mr. Dinan $4,000 in December 2009. Id.

On March 12, 2010, Mr. Dinan resigned and signed a Separation Agreement and General Release whereby Alpha promised to pay him a severance allowance of $26,666.67. Id.; Def.'s Answer Attach 3, Separation Agreement and General Release (ECF No. 9–3) ( Sep. Agmt.). That same day, Alpha issued three checks to Mr. Dinan: two checks totaling $14,007.97 and a third check in the amount of $5,434.71. Order at 3. The first two checks were for the $26,666.67 severance payment, which was reduced to $14,007.97 after taxes, and the third check was intended to cover all wages, commissions, overtime, bonuses, and accrued unused vacation time or paid time-off that he earned during his employment. Id.; see Aff. of Michael Dinan Attach 1, Severance Allowance Checks and Am. Separation Agreement at 1 (ECF No. 17–1) ( Checks & Am. Sep. Agmt.).

After the checks were issued, Alpha realized that it did not deduct the $4,000 payment it made to Mr. Dinan in December 2009 from the proposed severance. Order at 3. Contrary to Mr. Dinan's interpretation, Alpha considered the $4,000 payment to be an advance, not a gift. Id. Accordingly, on March 12, 2010, Alpha e-mailed Mr. Dinan and told him not to deposit the checks. Id. Alpha then e-mailed Mr. Dinan a revised Separation Agreement and General Release, which reduced the gross severance payment of $26,666.67 ($14,007.97 after taxes) by $4,000. Id. at 3–4. Alpha also placed a stop payment on the two checks totaling $14,007.97 and e-mailed Mr. Dinan a formal First Amendment to the Separation Agreement and General Release for his signature on March 15, 2010. Id. at 4.; see Checks & Am. Sep. Agmt. 2–4.

Mr. Dinan refused to sign the amended Separation Agreement and demanded full payment of the $26,666.67 severance. Order at 4. He e-mailed Alpha on April 4, 2010 and April 14, 2010 demanding payment under their original agreement. Id. On May 5, 2010, Alpha's attorney sent Mr. Dinan a letter demanding that he sign the amended Separation Agreement and that he provide certain customer information. Id. Alpha's lawyer also threatened to sue Mr. Dinan for damages and promised to pay the amended severance “in due course” after Alpha received the agreement and requested information. Id. On June 10, 2010, Mr. Dinan's attorney sent a letter to Alpha citing Maine Revised Statutes, title 26,...