Masingill v. Emc Corp.

• Court: Supreme Judicial Court of Massachusetts
• Writing for the Court: Cordy
• Citation: Masingill v. Emc Corp., 870 N.E.2d 81, 449 Mass. 532 (Mass. 2007)
• Decision Date: 20 July 2007
• Docket Number: SJC-09781.
• Parties: Joanne MASINGILL v. EMC CORPORATION & others.<SMALL><SUP>1</SUP></SMALL>

870 N.E.2d 81

449 Mass. 532

Joanne MASINGILL v. EMC CORPORATION & others.¹

SJC-09781.

Supreme Judicial Court of Massachusetts, Worcester.

Argued April 3, 2007.

Decided July 20, 2007.

George L. Dresser, Worcester (Roy A. Bourgeois with him) for the plaintiff.

Joan A. Lukey, Boston (Amanda P. Masselam with her) for the defendants.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, & CORDY, JJ.

CORDY, J.

The plaintiff, Joanne Masingill, brought suit against her former employer, Data General Corporation (Data General or company), which, after her hiring, was acquired by the defendant EMC Corporation (EMC). She alleged that the defendants Ronald L. Skates, the chief executive officer of Data General, and Joel Schwartz, its senior vice-president, had, in the course of negotiations about the terms of her employment with Data General, made certain representations about benefits she would receive were the company to be sold. None of these terms appeared in her written employment agreement. When Data General was sold to EMC, Masingill did not receive the benefits she asserted had been promised. Masingill's claims of intentional misrepresentation were tried to a jury, which returned verdicts largely in favor of the defendants.

On appeal, Masingill challenges the jury instructions, claiming that they in effect directed a verdict for the defendants. She also argues that the trial judge should have allowed her motion to recuse himself. That motion came after the case was moved from one trial session to another in circumstances Masingill argues undermine the presumption of impartiality. The defendants cross-appeal from the judgment on the one misrepresentation claim on which the jury found for Masingill, arguing that the judge should have entered judgment notwithstanding the verdict (judgment n.o.v.). We agree that judgment n.o.v. should have been entered on this claim. Otherwise, we affirm.

1. Background. The evidence at trial was as follows. Masingill's first contact with Data General came through an executive recruiter, Debra Germaine, who had been hired to identify and recruit candidates for the position of vice-president of marketing in the company's CLARiiON division.² Schwartz had been put in charge of that division in the fall of 1997, and by mid-1998 was developing a plan to expand its business. The marketing position was an integral part of that plan. At the time she was recruited, Masingill worked for Compaq, which had recently acquired her previous employer, Microcom. Masingill was displeased that, when Microcom was acquired by Compaq, she had lost her position as a corporate vice-president and the only offer forthcoming to remain at Compaq was as a program manager.

Germaine contacted Masingill about the position at Data General in August, 1998. While Germaine ultimately provided Schwartz with a number of resumes, Masingill was the only candidate interviewed. Schwartz began speaking with Masingill in late September, 1998. He had a positive impression of her and arranged for her to meet with a number of other people at Data General. In order to facilitate a possible offer, Masingill purported to share details of her position at Compaq, telling Schwartz that she held the position of vice-president³ at Compaq and was paid over $200,000 a year. She also told him that, were she to leave Compaq before the end of the year, she would forfeit a guaranteed bonus of $70,000 and a number of valuable stock options.⁴

Masingill's first and only face-to-face meeting with Skates took place in his office on November 9, 1998. Masingill asked Skates about rumors that Data General was a takeover target. She testified that Skates told her that Data General was not for sale. This was important to Masingill because she did not want to go through another acquisition process. Skates, in contrast, testified that he told Masingill that while there were no offers to buy the company "on the table," Data General was "always for sale" for a reasonable price.⁵ He also testified that, before the time of Masingill's interview, he had spoken with several other companies about possible investments in Data General, business combinations, or acquisitions. When he met with Masingill, however none of these negotiations was active, and there were no present or imminent offers. Masingill testified that she believed Skates's statement that the company was not for sale, and would not have gone to work for Data General had she in fact known there were ongoing discussions to sell the company.

The conversation then turned to the protections Masingill desired in the event of a takeover. Her primary concern was that she be given forward vesting of stock options—that is, that any unvested stock options would vest immediately on a change in control. Skates told her that this was "impossible" because it was part of a "full chute."⁶ Those hired for jobs at the vice-president level were ordinarily not offered this benefit at Data General unless their position made them a corporate officer. The position for which Masingill was interviewing would not make her such an officer, and Skates testified that he told her so during the meeting. He also told her that the board of directors would not approve a full chute for her as part of an initial offer.⁷ Nevertheless, Masingill testified that Skates told her that he would "see that [she would] get a full chute during [her] first year" at Data General.

Masingill testified that she did not know any particulars about the terms of a "full chute" at Data General other than that it included forward vesting of stock options. Masingill therefore asked what would happen should the company be acquired before the end of her first year. Skates (according to Masingill) told her that he would "take care of [me]." She "understood that to mean that if for any reason he was not able to give me the chute before the company was acquired then he would in fact see that I got the chute in any case."⁸ Skates testified that he made no particular promises to Masingill during this meeting other than a commitment to give her the usual annual review. These reviews involved possible raises and other benefits, including a "chute," depending on performance.

After the meeting with Skates, Masingill's negotiations with Data General began in earnest. Her primary contact in that process was Schwartz, although she also spoke with personnel from Data General's human resources staff. Germaine would often serve as an "intermediary," as Masingill put it. Schwartz described Masingill as a "tougher negotiator" than most, who had "many specific requests of both a major significance and a minor significance." Schwartz testified that Masingill would bring up her desire for a "chute" in each discussion they would have, but that he consistently told her that only Skates could suggest that benefit to the board of directors. Schwartz did not believe that Masingill warranted a chute, and did not press Skates to support this benefit.

According to Germaine, Schwartz told her (presuming that she would then tell Masingill) that he would ask Skates about a written "chute" for Masingill. Later, though, he told Germaine that Skates would not approve putting in writing a chute for Masingill. Germaine further testified that when she asked Skates about this, he explained that giving Masingill a written chute would anger some other executives who did not have that benefit; but that Masingill could expect the chute in writing after one year. Germaine also testified that Skates told her that, if the company were sold before one year, he would "take care of her." He made no guarantee that the company would not be sold.

Masingill received a formal offer letter from Data General on November 19, 1998. It provided for a base annual salary of $225,000 and a signing bonus of $70,000. It also included a significant grant of stock options. There was, however, no allowance for any salary continuation or immediate vesting of options on a change of control. Masingill and Germaine then contacted Schwartz to say that this was unacceptable because "[s]he wanted a chute." Data General then presented Masingill with a "contract addendum," which Schwartz had read and approved. It modified the previous offer by granting Masingill a salary continuation of one year in the event of her termination due to a change of control. There was no mention of stock option vesting.

The contract addendum was dated November 24, 1998. On that same day, Masingill and Schwartz met together for breakfast. She testified that she was "disappointed" that the addendum was not more favorable to her, but that Schwartz "basically said he was sorry that they couldn't do anything more, the offer stood the way it was," without a chute.⁹ Schwartz and Masingill did discuss the possibility that she would receive a six-month review. She testified that he said, "I will commit to give you a six-month review to address these issues and to make you whole."¹⁰ Schwartz testified to telling Masingill that he "would be willing to do a six-month performance review," but that any changes he could make would only be in cash compensation¹¹ and would have to be based on "outstanding" performance.¹² Masingill also asked for an increase in the number of stock options she would be granted. She thought such an increase in stock options would be included in the commitment to "make [her] whole."

The next day Masingill received a further revision to the offer letter. The modifications in the second addendum included changes to Masingill's insurance coverage and participation in the company pension plan (not stock options plan), and offered to pay for a home computer and Internet connection. The addendum did not mention a review or stock option vesting. Masingill signed the original letter and both addenda on December 2, 1998. She began work at Data General in early January, 1999.¹³

In August, 1999, eight months into her tenure...