Trindade v. Grove Servs.

• Decision Date: 22 February 2023
• Docket Number: Civil Action 19-cv-10717-ADB
• Parties: PAULO TRINDADE, Plaintiff, v. GROVE SERVICES, INC. and VICTOR SPIVAK Defendants.
• Court: U.S. District Court — District of Massachusetts

PAULO TRINDADE, Plaintiff, v. GROVE SERVICES, INC. and VICTOR SPIVAK Defendants.

Civil Action No. 19-cv-10717-ADB

United States District Court, D. Massachusetts

February 22, 2023

FINDINGS OF FACT AND CONCLUSIONS OF LAW

ALLISON D. BURROUGHS U.S. DISTRICT JUDGE

Table of Contents

I. INTRODUCTION 2

II. PROCEDURAL HISTORY . 2

III. FINDINGS OF FACT 3

A. The Parties .......................................................................................................................... 3

B. The Employment Agreement .............................................................................................. 3

C. Plaintiff's Commissions ...................................................................................................... 5

D. Plaintiff's AGO Complaint and Lawsuit .......................................................................... 12

IV. CONCLUSIONS OF LAW ................................................................................................. 12

A. Count I: Wage Act Violations........................................................................................... 13

i. Threshold Issues ................................................................................................................ 14

ii. 2016 Wage Act Claim ....................................................................................................... 16

iii. 2015 Wage Act Claim ....................................................................................................... 18

B. Count II: Breach of Contract............................................................................................. 21

V. DAMAGES ........................................................................................................................... 22

VI. CONCLUSION .................................................................................................................... 23

I. INTRODUCTION

Paulo Trindade (“Plaintiff”) brought this action against his former employer Grove Services, Inc. (“Grove”) and its President, Victor Spivak (“Spivak,” together “Defendants”), alleging breach of contract and violations of the Massachusetts Wage Act (“Wage Act”), Mass. Gen. Laws ch. 149, §§ 148-50, in connection with commissions allegedly due to him under his employment contract from 2013 to 2016.

II. PROCEDURAL HISTORY

Plaintiff first filed suit against Defendants on April 15, 2019. [ECF No. 1]. On July 24, 2020, he filed an amended complaint asserting violations of the Wage Act for failure to pay timely pay due and payable wages (Count I), [ECF No. 42 (“Am. Compl.”) ¶¶ 17-26], and breach of contract (Count II), [id. ¶¶ 27-31], against both Defendants. Defendants moved to dismiss the amended complaint on August 7, 2020. [ECF No. 46]. On November 9, 2020, the Court granted the motion only as to Count II as alleged against Spivak. [ECF No. 89]. Shortly thereafter, on December 9, 2020, Defendants moved for partial summary judgment on the claims arising from Plaintiff's 2013, 2014, and 2016 commission payments. [ECF No. 91]. The motion was denied on September 16, 2021. [ECF No. 101].

The case proceeded to trial on Count I against both Defendants and Count II against Grove. A five-day bench trial took place between April 27 and May 13, 2022. [ECF Nos. 193, 196, 198-99, 201]. The Court heard testimony from five witnesses. [Id.]. After closings, the parties submitted proposed findings of fact and conclusions of law. [ECF Nos. 222-23]. During trial, the parties each moved for judgment on the findings. [ECF No. 194 (Defendants)]; [ECF No. 200 (Plaintiff)]. Both motions were opposed, see [ECF Nos. 197, 202], and are still pending before the Court.

Having considered the evidence presented at trial, the parties' motions for judgment on the partial findings, and the parties' post-trial submissions, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).

III. FINDINGS OF FACT

A. The Parties

Grove is an export trading company that sells frozen meat products, primarily outside the United States. [April 27 Tr. 19:20-20:8]. The company is headquartered in Massachusetts and has offices in Atlanta, Brazil, Switzerland, Hong Kong, and Russia as well as a distribution operation in Ukraine. [Id. at 21:13-22:3]. Spivak is the company's owner and President, and also the primary salesperson for Russia and Ukraine. [Id. at 22:12-17]. From 2010 to 2017, Plaintiff worked for Grove as the Product and Sales Director for Latin America. [Ex. 3 ¶ A.1. (a); April 27 Tr. 19:18-19, 20:13-14]. He was based in the company's Atlanta office. [April 27 Tr. 21:13-14].

B. The Employment Agreement

Plaintiff entered into an employment agreement (the “Agreement”) with Grove on September 24, 2010, [Ex. 3], which was drafted by Grove, [April 27 Tr. 24:18-19].

Plaintiff's primary responsibility was to sell products in Latin America. [April 27 Tr. 20:22-21:12]. Pursuant to the Agreement, he was to receive an annual base salary of $130,000 and a “gross commission on sales generated and managed by [Plaintiff] . . . equal to fifteen percent (15%) of the Net Profits attributable to such sales to the extent that such Net Profits exceed []$150,000 in the aggregate in any calendar year.” [Ex. 3 ¶ A.4(a), (d)(i)]. The commission would be equal to: “the gross sales order amount generated and managed by [Plaintiff]” minus the following six categories of deductions. [Id. 3 ¶ 4(d)(ii)].

[1] [T]he actual costs of goods sold attributable to such sales orders . . . [2] all transportation and freight charges relating to the transportation of product and all storage charges, demurrage charges, insurance and other costs and expenses directly relating to such sales orders . . . [3] a proportionate amount of the salary, bonus, benefits and other compensation paid to or on behalf of employees and consultants, including you, working out of or for the Company's Atlanta office . . .

[4] proportionate amount of the overhead, costs and expenses of the Company's Atlanta office and a proportionate amount of the overhead, costs and expenses of the Company reasonably apportioned to the Company's Atlanta office . . . [5] a proportionate amount of all interest expenses (internal or external) calculated as a function of the working capital needs of the Company's Atlanta office . . . [6] a proportionate amount of a fifteen percent (15%) return on the capital investment of the Company in its Atlanta office.

[Id. ¶ 4(d)(ii)].

The Agreement provided that, “[a]ll classifications of costs shall be made by the Company and all calculations of proportionate amounts of such costs shall be made by the Company in accordance with any reasonable allocation method selected by the Company.” [Id.] “Company” is defined by the Agreement as “Grove Services, Inc., a Massachusetts corporation.” [Id. at 2]. The Agreement required that the commission “shall be calculated by the Company and paid to you within sixty (60) days after the relevant calendar year end.” [Id. ¶ 4(d)(i)].

In addition to base pay and commission, following his first full year of employment, Plaintiff was eligible for a Retention Incentive Program, which was a discretionary bonus that “[t]he Company may, in its sole discretion, elect to establish ....on terms and conditions” that would be determined also by Grove. [Id. ¶ 4(e)]. Grove had “no obligation” to establish a Retention Incentive Program. [Id.]. The “nature and timing” of other bonuses, if any, was “determined by [Spivak] in his sole discretion.” [Id. ¶ 4(f)].

Finally, per the terms of the Agreement, “[n]o amendment or alternation of the terms of this letter agreement shall be valid unless made in a writing signed by each of the parties hereto and specifically referencing this letter agreement.” [Id. ¶ 15]. The Agreement was never amended in writing and remained in effect for the entirety of Plaintiff's employment with Grove. [May 4 Tr. 83:2-8].

C. Plaintiff's Commissions

At the heart of this dispute is Plaintiff's commission compensation for the years 20142016.^[1]

i. Plaintiff's Commissions

Grove typically provided Plaintiff with a one-page breakdown, called a “Bonus Summary,” that showed his commission calculation prior to his commission being paid each year. [April 27 Tr. 27:17-28:21]; see also [Ex. 9 (2013 Bonus Summary), Ex. 10 (2014 Bonus Summary), Ex. 12 (2016 Bonus Summary)]. Grove typically did not calculate commissions until it received bills, payments, and other financial information for the previous year, which was usually by mid-February. [May 6 Tr. 232:25-233:10]. Grove's accountant, Jason Gordon (“Gordon”), testified that it would take approximately two additional weeks to calculate the sales commissions. [Id. at 233:3-4]. This meant that, in practice, Plaintiff's commission was typically not paid within 60 days after the end of the previous calendar year as required by the Agreement. Plaintiff testified that his commissions were typically not paid until the spring. [April 27 Tr. 26:20-27:6].

Gordon calculated the commissions for all sales representatives and Spivak reviewed those calculations and sometimes made changes. [May 6 Tr. 279:21-282:4, 283:12-15]. For example each year, Spivak decided on an employee-by-employee basis whether to impose return on capital investment and interest expenses, known as the “cost of capital” charge, in the commission...