Okerman v. Va Software Corp.

• Decision Date: 20 August 2007
• Docket Number: No. 06-P-1356.,06-P-1356.
• Citation: 871 N.E.2d 1117,69 Mass. App. Ct. 771
• Parties: William OKERMAN v. VA SOFTWARE CORPORATION<SMALL><SUP>1</SUP></SMALL> & another.<SMALL><SUP>2</SUP></SMALL>
• Court: Appeals Court of Massachusetts

871 N.E.2d 1117

69 Mass. App. Ct. 771

William OKERMAN v. VA SOFTWARE CORPORATION¹ & another.²

No. 06-P-1356.

Appeals Court of Massachusetts, Norfolk.

Argued May 17, 2007.

Decided August 20, 2007.

Joanne D'Alcomo, Boston, for the plaintiff.

Bret A. Cohen (M. Elizabeth Gomperz with him), Boston, for the defendants.

Present: COWIN, BROWN, & MEADE, JJ.

MEADE, J.

These cross appeals arise out of an employment dispute between William Okerman and his former employer, VA Software Corporation (VA), as well as VA's president, Larry M. Augustin. Okerman appeals the dismissal of his claim pursuant to G.L. c. 149, § 148 (wage act), against Augustin; the judgment on the pleadings for VA regarding an identical wage act claim; the allowance of summary judgment to VA on Okerman's breach of contract claim; and the exclusion of certain evidence relevant to his claim of a violation of the covenant of good faith and fair dealing. VA appeals from the denial of its motion for summary judgment on Okerman's claim for breach of the implied covenant of good faith and fair dealing. For the reasons discussed below, we vacate the dismissal of Okerman's wage act claims against VA and Augustin. In all other respects, we affirm.

1. Background. On March 24, 1999, Okerman accepted a written offer of employment from VA. He began work as VA's Boston marketing manager on March 29, 1999. The terms of his employment included an annual base salary of $90,000, participation in the company's stock option plan, and the "standard VA Research Commission Plan for 1999." That commission plan provided that Okerman would earn a varied percentage of commissions depending on the amount of revenue he generated for VA.

A "Compensation Overview, Policy and Plan" was prepared by VA executives in November, 1999. That plan stated that VA's management had the right to "expand, reduce or otherwise change the territory and quota assignment as deemed appropriate to align with changes in business conditions." It also stated that "for all matters of administration, including modifications, the [Senior Vice President] ... shall have the sole and final authority."

On February 8, 2000, VA notified its employees, including Okerman, of a new variable compensation plan. VA retroactively applied the February, 2000, plan to November 1, 1999. Around the same time, VA converted its fiscal year from one corresponding to the calendar year to one commencing at the end of July, so that November 1 became the start of the second quarter. On February 11, 2000, Okerman signed the variable compensation plan.

On August 28, 2000, VA notified its employees, including Okerman, of its second variable compensation plan, to be applied retroactively to July 31, 2000 (the first quarter of fiscal year 2001). Okerman signed the second variable compensation plan. A third variable compensation plan was presented to VA employees on November 27, 2000, applying retroactively from October 28, 2000, through January 26, 2001, i.e., the second quarter of fiscal year 2001. Okerman signed the third variable compensation plan on December 1, 2000.

On March 5, 2001, VA notified its employees of yet another variable compensation plan, applying retroactively from January 27, 2001, through April 28, 2001, i.e., the third quarter of fiscal year 2001. Okerman signed the fourth variable compensation plan on May 20, 2001. Finally, on May 7, 2001, VA notified its employees of a fifth variable compensation plan, which applied retroactively from April 29, 2001, through July 28, 2001, i.e., the fourth quarter of fiscal year 2001. Okerman signed this plan on May 20, 2001.

In June, 2001, VA informed its employees of its decision to exit the hardware business and to terminate the majority of its employees effective June 29, 2001. Okerman remained at VA through July 27, 2001.

2. Procedural history and Okerman's claims. In November of 2001, Okerman filed a complaint in Superior Court asserting claims against VA of breach of contract, quantum meruit, breach of the covenant of good faith and fair dealing, promissory estoppel, and violation of the wage act. Okerman also asserted that Augustin had violated the wage act.³

Although Okerman acknowledged having signed each new compensation plan, he claimed that he did so only to acknowledge receipt and not to accept the terms of those plans. He claimed that VA changed its compensation plans in bad faith to deprive him of compensation. Okerman further complained that he earned commissions that were not paid, and that VA wrongfully deprived him of additional earnings derived from one particular account. Finally, Okerman claimed that his official termination date was chosen so as to deprive him of the vesting of stock options he would have received two days after his termination.

On June 27, 2002, a Superior Court judge allowed Augustin's motion to dismiss the wage act claim against him.⁴ On July 9, 2003, a second Superior Court judge allowed summary judgment to VA on Okerman's breach of contract, quantum meruit, and promissory estoppel claims, but denied summary judgment as to Okerman's claim that VA breached the covenant of good faith and fair dealing. In the same decision, the second motion judge allowed VA's motion for judgment on the pleadings as to Okerman's wage act claim against VA. In September, 2004, the breach of the covenant of good faith and fair dealing claim was tried to a jury. The jury reached a verdict for Okerman and awarded him $136,876 in damages.

3. Discussion. The wage act claims. When reviewing a motion to dismiss, we take the well-pleaded allegations in the complaint as true and must make all reasonable inferences in favor of the plaintiff. See Harvard Law Sch. Coalition for Civil Rights v. President & Fellows of Harvard College, 413 Mass. 66, 68, 595 N.E.2d 316 (1992); General Motors Acceptance Corp. v. Abington Cas. Ins. Co., 413 Mass. 583, 584, 602 N.E.2d 1085 (1992). A complaint may properly be dismissed for failure to state a claim when it appears certain "that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Nader v. Citron, 372 Mass. 96, 98, 360 N.E.2d 870 (1977), quoting from Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Our review of an allowed motion to dismiss is de novo. Eigerman v. Putnam Invs., Inc., 66 Mass. App.Ct. 222, 225, 846 N.E.2d 418, further appellate review granted, 447 Mass. 1110, 854 N.E.2d 441 (2006).

The allowance of a motion for judgment on the pleadings is governed by Mass. R.Civ.P. 12(c), 365 Mass. 754 (1974), which provides that "[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Rule 12(c) effectively functions as a "`motion to dismiss ... [that] argues that the complaint fails to state a claim upon which relief can be granted.' Jarosz v. Palmer, 436 Mass. 526, 529, 766 N.E.2d 482 (2002), quoting from Smith & Zobel, Rules Practice § 12.16 (1974)." Ritchie v. Department of State Police, 60 Mass.App.Ct. 655, 659, 805 N.E.2d 54 (2004). Our review of an allowed rule 12(c) motion also is de novo. See Boston Water & Sewer Commn. v. Commonwealth, 64 Mass.App.Ct. 611, 614, 834 N.E.2d 1205 (2005).

The wage act appears in a portion of G.L. c. 149 subtitled "weekly payment of wages." It requires employers to pay employees in a timely fashion, according to the parameters set out in the statute. Despite its subtitle, "nothing in the weekly wage law itself requires the weekly payment of wages." Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 703-704, 831 N.E.2d 304 (2005) (Wiedmann). Indeed, "certain employees may be paid at other intervals, including monthly."⁵ DeSantis v. Commonwealth Energy Sys., 68 Mass.App.Ct. 759, 767 n. 11, 864 N.E.2d 1211 (2007). The Supreme Judicial Court has stated that the legislation "in its early form was enacted primarily to prevent unreasonable detention of wages" (emphasis in original). American Mut. Liab. Ins. Co. v. Commissioner of Labor & Indus., 340 Mass. 144, 147, 163 N.E.2d 19 (1959). See Wiedmann, supra at 703, 831 N.E.2d 304, citing Boston Police Patrolmen's Assn. v. Boston, 435 Mass. 718, 720, 761 N.E.2d 479 (2002) (clear purpose of wage act is to prevent unreasonable detention of wages).

The third paragraph of the wage act states that the statute "shall apply, so far as apt, to the payment of commissions when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due and payable to such employee, and commissions so determined and due such employees shall be subject to the provisions of section one hundred and fifty."⁶ G.L. c. 149, § 148, as appearing in St.1956, c. 259. The Legislature first enacted this paragraph in 1943, and no legislative history exists to shed light on the intent underlying this amendment. See St.1943, c. 467.

In their pretrial orders, which disposed of Okerman's wage act claims, the motion judges determined that the wage act did not apply to Okerman's commissions because his commissions represented earnings "above and beyond his base salary"; his commissions were "in addition to a healthy salary"; the wage act "was intended to protect wage earners who relied on the payment of their weekly or bi-weekly salary and, in the case of retail [sales] employees, the payment of a regular commission"; and Okerman's "right to commissions were contingent upon the attainment of certain sales goals being reached and therefore are not `definitely determined' under the [w]age [a]ct."⁷ Okerman argues that, with the exception of the "definitely determined" and the "due and payable" requirements (which he satisfies), the other restrictions have been improperly engrafted onto the statute. We agree.

"Where the language of a statute is plain, it is `the sole function of the courts ... to enforce it according to its terms.'" D'Avella v. McGonigle, 429 Mass....