Heather Fraelick vs. PerkettPR, Inc., & another
Case Details
- Citation
- 83 Mass. App. Ct. 698
- Procedural Posture — the stage the case had reached
- appeal
- State
- Massachusetts
- Circuit
- 1st Circuit
Related Laws
No specific laws identified for this ruling.
Claim Types
Outcome
Appeals court reversed dismissal and held that plaintiff's complaint adequately alleges claims under Massachusetts Wage Act for retaliation based on unpaid expense reimbursements, tortious interference, misrepresentation, and declaratory relief regarding noncompete agreement.
Excerpt
Heather Fraelick vs. PerkettPR, Inc., & another. No. 11-P-1832. Essex. June 4, 2012. June 6, 2013. Present: Katzmann, Brown, & Sullivan, JJ. Massachusetts Wage Act. Labor, Wages. Employment, Retaliation. Contract, Employment, Misrepresentation, Interference with contractual relations. Unlawful Interference. Declaratory Relief. Practice, Civil, Dismissal. Discussion of the Wage Act, G. L. c. 149, §§ 148 et seq., which commands every employer to pay an employee the wages earned by the employee at regular intervals and within a set number of days after the termination of the pay period during which the wages were earned; which prohibits exemption by means of a special contract; which prohibits retaliation against an employee for seeking his or her rights under the Wage Act; and which permits an aggrieved employee a private right of action to recover wages wrongfully withheld or detained by an employer. [703-705] In a civil action brought by an employee (plaintiff) against her employer, alleging violation of the Wage Act, G. L. c. 149, §§ 148 et seq., the judge erred in dismissing the action for failure to state a claim on which relief could be granted, where, with regard to a claim that the plaintiff’s employment was terminated in retaliation for her speaking out to senior management about the employer’s failure to pay timely sums due under the plaintiff’s contract, the complaint, fairly read, alleged that an otherwise permissible expense reimbursement arrangement designed to benefit employees had been abandoned and replaced with a policy and practice that required the employee, under penalty of discharge, to advance, indefinitely, expenses for the employer’s benefit [705-708]; where a claim of tortious interference with contractual relations (brought against an individual defendant) required an assessment of state of mind and should be evaluated on the basis of a factual record [708]; where, with regard to a claim of misrepresentation, the complaint set forth questions (e.g., whether the plaintiff actually relied on promises made by the individual defendant and whether the plaintiff’s reliance was reasonable) that could not be resolved on a motion to dismiss [708-709]; and where, likewise, with regard to the plaintiff’s request for a judgment declaring that the noncom-petition provision in her contract was unenforceable, the complaint set forth allegations sufficient to survive a motion to dismiss [709]. Civil action commenced in the Superior Court Department on April 13, 2011. A motion to dismiss was heard by Robert A. Cornetia, J. Joseph L. Sulman for the plaintiff. William J. Royal, Jr., for the defendants. Christine Perkett. Brown, J. Just days after an at-will employee reiterated her displeasure to her employer at having long been denied a part of her compensation, she was fired. A complaint, filed by the aggrieved employee (plaintiff), set out a series of interlinked facts, sufficiently detailed, which, when read together, suggested the corporate employer and its president had violated § 148A of the Massachusetts Wage Act, G. L. c. 149, §§ 148 et seq. (Wage Act), by terminating the plaintiff’s employment in retaliation for her speaking out to senior management about the employer’s failure to pay timely the sums due under her employment contract. In addition to the Wage Act claim, the plaintiff also sought compensatory relief, on common-law liability theories, and declaratory relief (see G. L. c. 231 A), from a written noncompete agreement that she had signed, at the behest of the employer, as a condition of employment. Contesting the legal viability of the complaint, the defendants jointly filed a Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), motion. A judge of the Superior Court allowed the motion and dismissed the complaint in its entirety. On appeal from the dismissal of her complaint by the judge, the plaintiff argues that her complaint alleges plausible entitlements to relief against PerkettPR, Inc. (PPR), and Christine Perkett, PPR’s president (collectively, the defendants). We conclude, for the reasons set forth herein, that the motion to dismiss was improvidently allowed. A rule 12(b)(6) motion may be allowed only when the complaint’s factual allegations (and reasonable inferences therefrom), accepted as true, do not plausibly suggest an entitlement to relief. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 635-636 (2008); Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011). “Factual allegations must be enough to raise a right to relief above the speculative level. . . [based] on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Iannacchino v. Ford Motor Co., supra at 636, quoting from Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Assertions set out in a motion to dismiss are not part of the rule 12(b)(6) review equation. Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 285 n.6 (2007). Romano v. Sacknoff, 4 Mass. App. Ct. 862, 863 (1976). We conclude, for the reasons set forth herein, that the complaint plausibly suggested an entitlement to remedial relief for violation of § 148A of the Wage Act, and declaratory relief as to a written noncompete agreement, which allegedly was unreasonably burdensome as to restrain unduly her right to secure gainful employment in her field of expertise (public relations). Claims for tortious interference and misrepresentation also were plausibly stated. A. Background. 1. Complaint. The complaint alleges the following: PPR, a private corporation doing business in this Commonwealth, hired the plaintiff, Heather Fraelick, as a full-time senior account executive, on written terms and conditions, which PPR had offered and which Fraelick, in turn, accepted in June, 2007. PPR holds itself out as a “virtual” public relations firm, since it neither owns nor rents commercial space, a business model that PPR purportedly promotes as a benefit to its clients insofar as lower overhead costs are said to yield lower client fees. PPR required Fraelick to work at home as well as pay a wide variety of business-related overhead costs out of her own pocket before being reimbursed by PPR. Specifically, memorialized by a written offer letter, PPR promised Fraelick an annual base salary of $60,000, plus other compensation and the benefit of the company’s “paid expenses program.” The agreed-to offer letter (or “contract” such as it is alleged) expressly stated the employment was “on an at-will basis.” The company’s paid expenses program called for PPR to reimburse fully an eligible employee, like Fraelick, for the business overhead costs incurred by her in performing her job, including but not limited to: telephone service fees,* ** laptop computer, basic office supplies, postage fees, and expenses associated with business travel undertaken on behalf of PPR. Based on its written offer, Fraelick believed the expense program was a component of her agreed-to compensation package. In December, 2009, PPR ceased to hold to its side of the bargain, by failing to compensate or reimburse Fraelick for costs that she had incurred in the course of her employment. On a number of occasions, throughout 2010, Fraelick took up this compensation issue with PPR’s president, Christine Perkett, who at all times acknowledged the debt owed and unequivocally promised to pay all outstanding expenses as soon as possible. Allegedly, in November, 2010, PPR paid Fraelick for some portion of the business expenses she had incurred some twelve months prior (in December, 2009). However, as late as December 31, 2010, PPR had not repaid Fraelick for overhead expenses that she paid, on behalf of PPR, throughout calendar year 2010, in the regular course of performing her job and attending to PPR client matters. This was of considerable concern to Fraelick, and particularly so in January, 2011, when a PPR client asked that she attend an upcoming meeting or event in Atlanta, Georgia. On February 3, 2011, Fraelick, once again, raised the matter of her unpaid expenses, directly with Perkett. The matter was weighing on Fraelick, both financially and otherwise. Some portion of her costs allegedly extended as far back as 2009. Fraelick expressed concerns that, due to financial hardship, she was then presently unable to travel to Georgia, or meet with other out-of-town clients, until PPR paid her what was due and owing. Two days later, on February 5, PPR delivered a check to Fraelick for the monies owed — some $3,000, more or less — and, on February 8, PPR fired Fraelick, citing her “unwillingness” to continue paying for the firm’s business expenses associated with her traveling to meet with PPR’s clients, without receiving timely reimbursement. Contemporaneously with the termination of Fraelick’s employment, PPR and Perkett directed a letter to Fraelick advising of the latter’s “continuing” contractual obligations under the noncompetition agreement, including its unqualified ban on soliciting (or attempting to solicit) PPR’s existing or prospective clients, for a period of one year from her separation from the company. PPR has clients nationwide and it seeks out business opportunities world-wide. Fraelick took seriously the implied threat of PPR to seek enforcement of its noncompete agreement, and the prospect of substantial costs in defending against such a claim. Fraelick claims to have suffered damages, including loss of future wages and benefits, and compensable emotional harm. This account is, essentially, the sum and substance of the factual allegations contained in the plaintiff’s complaint, allegations we accept as true and from which we draw every reasonable inference in her favor. 2. Motion to dismiss. The plaintiff caused each defendant to be duly served and commenced an action in the Superior Court. Pursuant to rule 12(b)(6), the defendants moved to dismiss the complaint, arguing (among other contentions) that the plaintiff’s allegations “do not rise to colorable claims on any of this scattershot eight (8) count complaint.” After a hearing, the judge allowed the defendants’ motion, ruling: “[1] business expenses are not covered under the Massachusetts Wage Act” and [2] “plaintiff’s claims fail to satisfy pleading standards set out under Iannacchino v. Ford Motor Co., 451 Mass. 623 (2008).” B. The Wage Act. It is common ground that the Wage Act, G. L. c. 149, §§ 148 et seq., lies at the heart of this case. It is useful to identify provisions of this long-standing statutory scheme, arguably implicated here, so as to frame the plaintiff’s factual statement, in light of the well-settled public policies advanced by this comprehensive law. 1. Payment of wages. Section 148 of the Wage Act (§ 148) commands “[ejvery” employer to pay an employee “the wages earned” by the employee at regular intervals and within a set number of days after “the termination of the pay period during which the wages were earned.” § 148, first par., as amended through St. 1992, c. 133, § 502. See Boston Police Patrolmen’s Assn. v. Boston, 435 Mass. 718, 720 (2002), citing American Mut. Liab. Ins. Co. v. Commissioner of Labor & Indus., 340 Mass. 144, 147 (1959). The Wage Act does not define “wages” other than to provide they “shall include any holiday or vacation payments due an employee under an oral or written agreement.” § 148, first par., inserted by St. 1966, c. 319. Nor is “earn” defined, but it is commonly understood to mean “[t]o acquire by labor, service, or performance.” Awuah v. Coverall N. America, Inc., 460 Mass. 484, 492 (2011), quoting from Black’s Law Dictionary 584 (9th ed. 2009). For purposes of construing the Wage Act, when an employee has “completed the labor, service, or performance required of him [or her],” it necessarily follows that he or she has “earned” his or her due “wage.” Awuah v. Coverall N. America, Inc., supra. 2. No exemption by means of a special contract. Section 148 of the Wage Act further provides, in relevant part: “No person shall by a special contract with an employee or by any other means exempt himself from this section.” § 148, sixth par., as appearing in St. 1956, c. 259. The legislative intent, again, is to prevent the unlawful detention of wages, including, as alleged here, by agreement between the employer and employee. 3. Antiretaliation. Section 148A of the Wage Act (§ 148A), in no uncertain terms, commands that an employer shall not “penalize[]” an employee, in any way, due to or as a result of “any action” by the employee “to seek his or her rights” under the Wage Act. This is, in effect, a stiff antiretaliation law, which is strictly applied for the protection of employees who suffer adverse employment consequences for engaging in protected activity. “A complaint made to an employer (or a manager of the employer) by an employee who reasonably believes that the wages he or she has been paid violate such laws readily qualifies as such [a protected] action.” Smith v. Winter Place LLC, 447 Mass. 363, 367 (2006). 4. Private right of action. “The basic purpose of the [Wage A]ct is ‘to prevent the unreasonable detention of wages.’ ” Weems v. Citigroup Inc., 453 Mass. 147, 150 (2009), quoting from Boston Police Patrolmen’s Assn. v. Boston, 435 Mass. at 720. An aggrieved employee has a private cause of action to recover “wages” wrongfully withheld or detained by the employer. G. L. c. 149, §§ 148 & 150. Of clear import here, § 148 provides that the “president and treasurer of a corporation and any officers or agents having the management of such corporation shall be deemed to be the employers of the employees of the corporation within the meaning of this section. . . . Whoever violates this section shall be punished ....”§ 148, sixth par. § 148, ninth par., as appearing in St. 1998, c. 236, § 10. Here, at all events, Perkett had served as PPR’s president, and thus, under the Wage Act, she is deemed, for purposes of this litigation, an “employer” of PPR’s employees. See Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 711 (2005) (under Wage Act’s plain language, “individuals may be held liable”). And, in 1999, prior to the commencement of the present action, the Legislature created a private right of action for employees aggrieved by an employer’s violation of § 148A, the antiretaliation law. See § 150 of the Wage Act (§ 150), second par., as amended by St. 1999, c. 127, § 145. See also Smith v. Winter Place LLC, 447 Mass. at 368 n.12. After filing a written complaint with the Attorney General, an employee may bring an action against her employer “for injunctive relief, for any damages incurred, and for any lost wages and other benefits. An employee so aggrieved who prevails in such an action shall be awarded treble damages . . . and shall also be awarded the costs of the litigation and reasonable attorneys’ fees.” § 150, second par., as amended by St. 2008, c. 80, § 5. See Awuah v. Coverall N. America, Inc., 460 Mass. at 490 n.15. The plaintiff alleges she received written authorization from the Attorney General prior to the time she commenced the underlying action in Superior Court. C. Discussion. 1. Section 148A retaliation claim. Without any explanation, the motion judge ruled, as matter of law, that “business expenses” are not covered by the Wage Act, in ordering the dismissal of the plaintiff’s statutory claims. In effect, the judge’s ruling implicitly failed to acknowledge the somewhat intricate § 148 claim that underlies this action. The judge’s ruling cannot stand. Section 148A of the Wage Act commands, “No employee shall be penalized by an employer in any way as a result of any action on the part of an employee to seek his or her rights under the wages and hours provisions of this chapter.” § 148A, first par., inserted by St. 1977, c. 590. Section 148A provides that an employer “who discharges or in any other manner discriminates against any employee because such employee has made a complaint to the attorney general or any other person . . . shall have violated [§ 148A] and shall be punished” (emphasis added). § 148A, second par., as appearing in St. 1999, c. 127, § 144. The legislative policy advanced by § 148A is clear: “to encourage enforcement of the wage laws by protecting employees who complain about violations of the same.” Smith v. Winter Place LLC, 447 Mass. at 368. In order to maintain an actionable claim under § 148A, a plaintiff is not obliged to successfully prove her right to seek recovery of the untimely paid “wages” in question. It is enough that a plaintiff, as here, reasonably believed the remuneration in question fell within the scope of the Wage Act. Id. at 367. See id. at 364 n.4, quoting from Abramian v. President & Fellows of Harvard College, 432 Mass. 107, 121 (2000) (viability of retaliation claim “does not depend on the success of the underlying . . . claim, so long as the plaintiff can prove that [she] ‘reasonably and in good faith believed the [employer] was engaged in wrongful [conduct under the Wage Act]’ and that the ‘[employer’s] desire to retaliate against [her] was a determinative factor in its decision to terminate [her] employment’ ”). In the instant matter, the complaint alleges the existence of an expense reimbursement arrangement in which the employee is reimbursed for business expenses incurred on behalf of the employer. In the ordinary course, the violation of a standard expense reimbursement arrangement would not constitute a violation of the Wage Act because the reimbursement is not compensation “earned” by “labor, service or performance.” Massachusetts State Police Commissioned Officers Assn. v. Commonwealth, 462 Mass. 219, 226 (2012), quoting from Awuah v. Coverall N. America, Inc., 460 Mass. at 492. However, this complaint alleges that the employer engaged in a pattern of nonpayment, coupled with continued demands that the employee advance expense monies in ever-increasing amounts, and fired her when she refused to advance any more money for the employer’s benefit. The Wage Act prohibits an employer from exempting itself from the timely and complete payment of wages by “special contract ... or by any other means.” § 148, sixth par. This provision is strictly enforced. In Awuah, supra, the employer unlawfully classified workers as independent contractors. The Supreme Judicial Court determined that the employer’s policy of treating employee’s wages as “interest-free advances” constituted an impermissible “special contract” under § 148, and that the “chargebacks” — amounts employees were required to repay when customers failed to pay the employer — constituted improper deductions that were not valid setoffs under § 150. Id. at 490, 492-493. The requirement that employees maintain liability insurance, for the employer’s benefit, also was determined to be a “ ‘special contract’ that [had] the effect of exempting the employer from the obligations to pay earned wages in full.” The court observed, “An employer’s insurance costs, when borne by an employee, reduce wages just as effectively as if the employer had obtained the policy and deducted funds from the wages.” Id. at 497 n.22. See ibid., quoting from 29 C.F.R. § 531.35 (2010) (“ ‘wages’ cannot be considered to have been paid . . . unless they are paid finally and unconditionally or ‘free and clear,’ [and not] ‘kick[ed]-back’... to another person for the employer’s benefit”). In Camara v. Attorney Gen., 458 Mass. 756 (2011), the employer maintained a written policy permitting it to make deductions from the wages of truckers involved in accidents, based on the employer’s “unilateral assessment of liability [and the] amount of damages.” Id. at 763. The Supreme Judicial Court likewise found a violation of the Wage Act’s prohibitions against special contracts and all but “valid set-off[s],” holding that no such unilateral deduction could take place without an adjudication of fault that is procedurally fair. Id. at 763-764. To be sure, these cases invo
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