Klauber v. VMware, Inc. ( 2023 )

United States Court of Appeals
For the First Circuit
No. 22-1417
BRIAN KLAUBER,
Plaintiff, Appellant,
v.
VMWARE, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, IV, U.S. District Judge]
Before
Kayatta, Selya, and Howard,
Circuit Judges.
David P. Angueira, with whom Swartz & Swartz, P.C. was on
brief, for appellant.
David L. Schenberg, with whom Mark H. Burak, Laurielle M.
Howe, and Ogletree, Deakins, Nash, Smoak & Stewart, P.C. were on
brief, for appellee.
August 11, 2023
SELYA, Circuit Judge. Plaintiff-appellant Brian Klauber
strives to persuade us that the district court erred in entering
summary judgment in favor of his quondam employer, defendant-
appellee VMware, Inc. (the Company), with respect to his contention
that he was wrongfully deprived of hundreds of thousands of dollars
in commissions allegedly due to him both under the Massachusetts
Wage Act, see Mass. Gen. Laws ch. 149, § 148, and under the common
law. After first upholding the district court's application of
Federal Rule of Evidence 408 and thus confirming the dimensions of
the summary judgment record, we turn to the meat of the district
court's thoughtful rescript and affirm its entry of summary
judgment on all of the plaintiff's claims.
I
We briefly rehearse the relevant facts and travel of the
case.
A
The Company is a computer software firm. The plaintiff
worked there — in different sales roles — for about six years
between July of 2012 and September of 2019. While employed at the
Company, the plaintiff's compensation comprised a combination of
a base salary plus commissions.
The commission arrangement lies at the epicenter of this
appeal. The plaintiff's commissions were governed by two
integrated agreements. The first was an individualized commission
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plan, which set the plaintiff's standard commission rates,
compensation targets, and product quotas. The second was a set of
terms and conditions applicable to the plaintiff's commission
plan.1 The Company periodically revised and reissued these
agreements and — each time a revised agreement emerged — the
plaintiff signed it (thereby confirming his agreement to the
revised terms and conditions).
The Company's fiscal year (FY) spanned the period from
February of the preceding year through January of the listed year.
The terms and conditions relevant to the contested commissions
were the versions in effect during the second half of FY 2018 and
the second half of FY 2019. Except where otherwise noted, the
relevant language remained essentially the same across the
different versions.
The terms and conditions stipulated that a commission
was only considered "earned" once three requirements had been
satisfied. We summarize them succinctly.
The starting point, of course, is that the employee must
have "[a]ccepted his or her [c]ompensation [p]lan." Next, the
employee must have had "eligible [q]uota [a]chievement." Finally,
a "Plan Reconciliation, including but not limited to the review of
any transactions deemed to be Exception Transactions, splits, and
1 The record reveals that these terms and conditions applied
to commission payments for all eligible employees.
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other Adjustments, [must have] been completed by [the Company],
analyzing all commissionable events, draws, [c]ommissions paid,
and factors affecting Variable Compensation." Plan Reconciliation
was, in a nutshell, the process through which the Company
determined whether and how much to adjust commissions for Exception
Transactions — Company parlance for atypical transactions.
The first two requirements are not in issue here, so we
train the lens of our inquiry on the third requirement. As already
noted, the terms and conditions specifically authorized
adjustments to commissions for Exception Transactions. The terms
and conditions included examples of transactions that would be
deemed Exceptions: the top ten customer deals within a quarter2;
transactions in which the value exceeded the employee's assigned
quota; certain transactions valued over $2,000,000; transactions
with "atypical management involvement," including transactions
with limited involvement by the employee; and transactions "that
contain[ed] non-standard terms or [were] atypical or extraordinary
for some other reason."
If a transaction was deemed to be an Exception
Transaction by the Company, according to these descriptive
specifications, the head of worldwide sales (in FY 2018) or the
This example appears only in the FY 2018 terms and
2
conditions; it does not appear in the FY 2019 terms and conditions.
For present purposes, that omission does not have any particular
significance.
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head of the sales compensation committee (in FY 2019) could, in
his or her "sole discretion," authorize adjustments to any
commissions claimed with respect to that transaction. The
commission schedule set by an employee's individualized commission
plan served as the baseline, and any adjustments were determined
on a case-by-case basis.
In FY 2019, the terms and conditions were augmented to
add a "Large Deal Review Policy." The added policy stated that a
review similar to that employed for Exception Transactions would
be conducted on deals valued at $10,000,000 or more. Any resulting
commission adjustments would require approval by the sales
compensation committee.
B
Against this backdrop, we turn to the transactions that
undergird the plaintiff's claims.
1. In FY 2018, the Company closed a deal with DXC
Technology Corporation (DXC). That deal was one of the most
munificent that the Company had ever consummated: it was worth
over $130,000,000. The plaintiff's role involved educating the
customer and answering technical questions about the Company's
products. He claims that he should have been paid a commission of
$32,124.99.
The head of worldwide sales designated the deal an
Exception Transaction because it was one of the top ten deals in
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the quarter, there was heavy senior-management involvement and
limited involvement of many lesser employees (including the
plaintiff), and the deal was structured in an unorthodox fashion.
The Company then determined, through Plan Reconciliation, that the
plaintiff had not been a core member of the sales team and that
his limited involvement necessitated a severe commission
adjustment. As a result, his commission was reduced to zero.
2. In FY 2019, the Company closed a deal with Barclays
Bank (Barclays) worth between $40,000,000 and $50,000,000. With
respect to this deal, the plaintiff was the Company's "landed
representative" in North America (which meant that he was
responsible for helping to manage relationships and sell products
to the financial services industry in North America). The deal
was designated by the Company as both a "Large Deal" and an
Exception Transaction because, among other things, it exceeded
certain employees' assigned quotas. At the end of the line —
through Plan Reconciliation — the Company determined that the
plaintiff's commission should be adjusted downward based on his
limited role in the deal: he had joined the team as landed
representative just three months before the transaction closed
(after most major negotiations had transpired), and he had not
been present with the core deal team in London. Accordingly, his
commission — which the plaintiff asserts should have been in the
amount of $429,153.57 — was scaled back to $208,721.58.
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C
The plaintiff was displeased with these commission
adjustments, but he did not complete the Company's internal dispute
resolution process with respect to either of them. Instead, he
resigned in September of 2019 and — the following month — he
brought suit against the Company in a Massachusetts state court.
He asserted claims for nonpayment of wages under the Wage Act,
breach of contract, unjust enrichment, and quantum meruit. Citing
the parties' diverse citizenship and the amount in controversy,
the Company removed the action to the United States District Court
for the District of Massachusetts. See 28 U.S.C. §§ 1332(a),
1441(a).
After discovery closed, the Company moved for summary
judgment across the board. The plaintiff opposed the motion. At
that point, the Company moved to strike certain portions of the
plaintiff's opposition, and the plaintiff objected to that motion.
The district court granted in part and denied in part
the Company's motion to strike. See Klauber v. VMware, Inc., 599
F. Supp. 3d 34, 37 (D. Mass. 2022). Thereafter, the court granted
the motion for summary judgment. See id. The court held that the
terms and conditions ancillary to the plaintiff's commission plan
were enforceable under Massachusetts law. See id. at 48. It then
held that the commissions that the plaintiff claimed he was owed
were not "wages" within the meaning of the Wage Act and, thus, not
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subject to the Act's protections. See id. With respect to the
breach of contract claim, the court held that the terms and
conditions allowed the commission adjustments. See id. And,
finally, the court determined that the plaintiff had no claim for
relief under theories of unjust enrichment and/or quantum meruit
because there was a valid contract between the parties. See id.
at 48-49.
This timely appeal followed.
II
In this venue, the plaintiff challenges the district
court's partial grant of the Company's motion to strike. He also
challenges the district court's entry of summary judgment on his
various claims. We address these challenges separately.
A
We start with the plaintiff's evidentiary challenge. He
submits that the district court erred in granting in part the
Company's motion to strike certain portions of his response to its
motion for summary judgment. We think not.
We "review the district court's evidentiary rulings made
as part of its decision on summary judgment for abuse of
discretion." Hoffman v. Applicators Sales & Serv., Inc., 439 F.3d
9, 13 (1st Cir. 2006). "'Abuse of discretion' is a phrase which
sounds worse than it really is." Aggarwal v. Ponce Sch. of Med.,
745 F.2d 723, 727 (1st Cir. 1984) (quoting In re Josephson, 218
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F.2d 174, 182 (1st Cir. 1954)). In the ordinary course, we "will
not find an abuse of discretion unless perscrutation of the record
provides strong evidence that the trial judge indulged in a serious
lapse in judgment." Hoffman, 439 F.3d at 14 (quoting Texaco P.R.,
Inc. v. Dep't of Consumer Affs., 60 F.3d 867, 875 (1st Cir. 1995)).
When adjudicating a motion for summary judgment, a
district court customarily may consider only evidence that would
be admissible at trial. See Garside v. Osco Drug, Inc., 895 F.2d
46, 49-50 (1st Cir. 1990); see also Fed. R. Civ. P. 56(c)(2). But
this general rule, like most general rules, admits of exceptions.
One exception, relevant here, is that the district court may
consider an "affidavit or declaration" as long as it is "made on
personal knowledge, set[s] out facts that would be admissible in
evidence, and show[s] that the affiant or declarant is competent
to testify on the matters stated." Fed. R. Civ. P. 56(c)(4).
With this plinth in place, we turn to Federal Rule of
Evidence 408. In pertinent part, the rule bars the admission of
certain types of settlement-related evidence "either to prove or
disprove the validity . . . of a disputed claim." Fed. R. Evid.
408(a); see, e.g., Rodriguez-Garcia v. Mun. of Caguas, 495 F.3d 1,
11-12 (1st Cir. 2007); McInnis v. A.M.F., Inc., 765 F.2d 240, 246-
48 (1st Cir. 1985). This includes evidence of "furnishing,
promising, or offering — or accepting, promising to accept, or
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offering to accept — a valuable consideration in compromising or
attempting to compromise the claim." Fed. R. Evid. 408(a)(1).
As a general matter, then, the purpose of Rule 408 is
"to promote a public policy favoring the compromise and settlement
of claims" by shielding negotiations from use in later litigation.
McInnis, 765 F.2d at 247; see Catullo v. Metzner, 834 F.2d 1075,
1078-79 (1st Cir. 1987). The drafters of the rule had in mind
that settlement evidence "is of questionable relevance on the issue
of liability . . . , since settlement may well reflect a desire
for peaceful dispute resolution, rather than the litigants'
perceptions of the strength or weakness of their relative
positions." McInnis, 765 F.2d at 247. Even so, Rule 408 does not
preclude the introduction of evidence relating to settlements and
compromises for other purposes, such as showing notice or "proving
a witness's bias or prejudice." Fed. R. Evid. 408(b); see
Rodriguez-Garcia, 495 F.3d at 11-12.
In response to the Company's motion for summary judgment
in this case, the plaintiff filed — under seal — a memorandum in
opposition, a statement of undisputed material facts (UMF
Statement), and several related documents. The Company moved to
strike certain portions of the memorandum, one paragraph of the
UMF Statement, one paragraph of the plaintiff's supporting
affidavit, one paragraph of an affidavit executed by the
plaintiff's counsel, and an exhibit annexed to counsel's
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affidavit. Each of these challenged items referred back to an
earlier suit (the Sanderson suit), in which the plaintiff and three
co-workers sued the Company for alleged violations of the Wage Act
arising in connection with their commission plans. The Sanderson
suit was settled, pursuant to a confidential agreement, in 2016.
The district court denied the motion to strike in part
and granted it in part. See Klauber, 599 F. Supp. 3d at 37. The
court denied the motion as to counsel's affidavit and the attached
exhibit, which consisted of a redacted version of the 2016
settlement agreement in the Sanderson suit. See id. at 44. The
court concluded that the plaintiff had introduced the "evidence of
the settlement agreement to show his state of mind when signing
off on [the Company's] terms, and not to prove or disprove the
validity of his current claims." Id. at 43. And "[w]hatever the
relevance of his then-existing mental state," that purpose did not
offend Rule 408. Id.
In all other respects, the district court granted the
motion to strike. See id. at 45. The challenged paragraphs in
the UMF Statement and the plaintiff's affidavit were sisters under
the skin. The former read: "After extensive discovery in the
matter of Sanderson . . . , the matter was resolved as a result of
[p]laintiff's arguments that [the Company's] conduct of improperly
reducing its employees' commission payments was not enforceable
under Massachusetts law." Id. The latter read: "After extensive
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discovery in that matter, the case was resolved as a result of our
claims that [the Company's] employment contracts with us were not
enforceable due to the unilateral and arbitrary provisions
allowing [the Company] to change our commissions after the fact."
Id. at 44-45. The memorandum added that "[m]ultiple provisions in
[the terms and conditions] are illegal under Massachusetts law; a
fact that [the Company] became well aware of over the course of
[its] previous litigation with [the plaintiff]." Id. at 45.
The district court struck the challenged paragraphs in
the UMF Statement and the plaintiff's affidavit as well as two
paragraphs in the memorandum. In the court's judgment, these
materials impermissibly offered information about the settlement
agreement in the Sanderson suit in an attempt to prove the validity
of the plaintiff's current claims. See id. These materials, the
court concluded, were "offered to demonstrate that [the Company]
settled the prior litigation because the terms and conditions
related to the payment of commissions were unenforceable under
Massachusetts law," which was essentially the same claim that the
plaintiff was pressing in the current litigation. Id.
In reaching this conclusion and in partially granting
the motion to strike, the district court acted within the compass
of its discretion. The court painstakingly distinguished between
the evidence that the plaintiff offered to show that he believed
the terms and conditions were unenforceable (which it admitted)
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and the evidence that the plaintiff offered to show that the
Company settled the Sanderson suit because the terms and conditions
were unenforceable under Massachusetts law (which it struck). The
two bodies of evidence served different purposes (one permissible
and one impermissible), and the court appropriately differentiated
between them on this basis. Drawing this line of demarcation and
acting upon it was plainly not an abuse of discretion.
The plaintiff demurs. He contends that the purpose of
the excluded evidence, like that of the admitted evidence, was to
show his "intent and state of mind when signing" the terms and
conditions pertinent to the commission plans at issue here (by
which he means his understanding that those terms and conditions
were unenforceable under Massachusetts law). This evidence, he
says, was also admissible to prove the Company's knowledge that he
believed the terms and conditions to be unenforceable and to refute
the Company's position that he knew the terms and conditions were
enforceable.
These contentions take the plaintiff in circles. The
excluded materials explicitly asserted that the settlement had
been reached because the commission arrangement was unenforceable
— the precise issue that this case presents. To state, for
example, that the Sanderson suit was "resolved as a result of our
claims that" the terms and conditions were "not enforceable due to
the unilateral and arbitrary provisions" is a blunt attempt to use
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a prior settlement to prove the validity of an eerily similar claim
currently before the court — a blunt attempt that Rule 408(a)
forbids. Those statements, as the district court astutely
observed, impermissibly "refer[] to the settlement agreement to
establish that the current claim at issue has already been decided
— that is, that [the Company's] contracts are unenforceable under
Massachusetts law." Id.
Finally, even if we were to discern any semblance of
error with respect to the district court's ruling on the motion to
strike (which we do not), any such error would be harmless. See
Dusel v. Factory Mut. Ins. Co., 52 F.4th 495, 511 (1st Cir. 2022)
("We may affirm in spite of an erroneous evidentiary ruling if the
error was harmless, meaning that it is highly probable that the
error did not affect the outcome of the case." (internal quotation
marks omitted) (quoting Tersigni v. Wyeth, 817 F.3d 364, 369 (1st
Cir. 2016))); see also Fed. R. Civ. P. 61. The plaintiff claims
that he offered the excluded evidence to show his subjective intent
when agreeing to the terms and conditions — that is, that he
believed the terms and conditions to be unenforceable. But
evidence of the plaintiff's subjective intent when entering into
the commission plans is immaterial under Massachusetts law. See
Greene v. Ablon, 794 F.3d 133, 147 (1st Cir. 2015) (applying
Massachusetts law); Okerman v. VA Software Corp., 871 N.E.2nd 1117,
1125 (Mass. App. Ct. 2007). Thus, any evidence of the plaintiff's
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subjective intent when accepting the terms and conditions would
not have moved the needle at all.
In variations on this theme, the plaintiff argues that
he wanted to introduce the evidence for two other reasons: to
show the Company's knowledge of his belief that the terms and
conditions were unenforceable and to show his lack of knowledge of
the Company's position that they were enforceable. These arguments
were not advanced below and, thus, are foreclosed on appeal. See
Teamsters Union, Local No. 59 v. Superline Transp. Co., 953 F.2d
17, 21 (1st Cir. 1992) ("[A]bsent the most extraordinary
circumstances, legal theories not raised squarely in the lower
court cannot be broached for the first time on appeal.").
That ends this aspect of the matter. We hold that the
district court did not abuse its discretion in granting in part
the Company's motion to strike portions of the plaintiff's
opposition to the Company's motion for summary judgment.
B
We turn next to the plaintiff's substantive claims. In
addressing those claims, we must keep in mind that this case is in
a federal court solely by virtue of diversity jurisdiction.
Consequently, state law supplies the substantive rules of
decision. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938);
Conformis, Inc. v. Aetna, Inc., 58 F.4th 517, 528 (1st Cir. 2023).
The parties agree that the law of Massachusetts controls, and we
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accept that reasonable agreement. See Borden v. Paul Revere Life
Ins. Co., 935 F.2d 370, 375 (1st Cir. 1991).
We review the entry of summary judgment de novo. See
Minturn v. Monrad, 64 F.4th 9, 13 (1st Cir. 2023). Summary
judgment is appropriate when the movant has shown "that there is
no genuine dispute as to any material fact" and that it is thus
"entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).
In conducting this tamisage, we construe the record in the light
most hospitable to the nonmoving party (here, the plaintiff) and
draw all reasonable inferences to his behoof. See Minturn, 64
F.4th at 14. When engaging in this mode of review, "[w]e are not
tied to the district court's rationale but, rather, may affirm the
judgment on any ground made manifest by the record." Id.
1
We first consider the Wage Act claims. The Act "imposes
liability on employers who fail to pay wages earned by their
employees." Ellicott v. Am. Cap. Energy, Inc., 906 F.3d 164, 169
(1st Cir. 2018); see Mass. Gen. Laws ch. 149, § 148. There is no
doubt that the plaintiff was an employee of the Company. The
principal question before us is whether the commissions that he
insists were owed qualify as protected wages.
Commissions may qualify as wages, sheltered by the Wage
Act, in certain circumstances. See Parker v. EnerNOC, Inc., 139
N.E.3d 328, 333 (Mass. 2020). To separate wheat from chaff, we
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must start with the premise that commissions are "contingent
compensation." Mui v. Mass. Port Auth., 89 N.E.3d 460, 463 (Mass.
2018). Thus, the prophylaxis of the Wage Act applies to
commissions only when "two conditions [have been] met: (1) the
amount of the commission 'has been definitely determined'; and (2)
the commission 'has become due and payable.'"3 Parker, 139 N.E.3d
at 333 (quoting Mass. Gen. Laws ch. 149, § 148).
A commission is "definitely determined" when it is
"'arithmetically determinable,' taking into account the
'applicable formulas and deductions' and the 'total from which
deductions would be taken.'" Okerman, 871 N.E.2d at 1124 (quoting
Wiedmann v. Bradford Grp., 831 N.E.2d 304, 312 (Mass. 2005),
abrogated on other grounds by Mass. Gen. Laws ch. 149, § 150, as
amended by 2008 Mass. Acts 71). But even if a commission is
susceptible to definite determination, it is not "due and payable"
until all "dependent contingencies have been met." Ellicott, 906
F.3d at 169.
3 The Massachusetts Supreme Judicial Court has left open the
possibility of commissions constituting "wages" under the Wage Act
despite not having been "definitely determined" and "due and
payable," at least in the context of a claim based on retaliation.
See Parker, 139 N.E.3d at 334-35; Mass. Gen. Laws ch. 149, § 148A.
There is no claim for retaliation here. The claims in this case
are simply for nonpayment of wages. See Mass. Gen. Laws ch. 149,
§ 148. Thus, we tailor our analysis to the claims before us,
bringing into play the longstanding rule that commissions must be
"definitely determined" and "due and payable" to constitute
"wages" under the Act. See Ellicott, 906 F.3d at 169.
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To be sure, the default rule is that a commission
"becomes due and payable when the employee closes the sale, even
if there is a delay in actual payment on the sale." Id. at 170(quoting McAleer v. Prudential Ins. Co. of Am., 928 F. Supp. 2d
280, 289 (D. Mass. 2013)). This default rule, though, is not a
fixed part of the "due and payable" calculus: an employer and an
employee may agree to different terms, thus modifying or
eliminating the default rule. Here, the commission plan agreed to
by the parties specifically set out other contingencies. In such
instances, "courts apply the terms of the plan." Id. (quoting
McAleer, 928 F. Supp. 2d at 289).
We turn, then, to the particular terms and conditions
that the parties agreed would determine the extent of any
commissions. Those terms and conditions provided — as material
here — that commissions were only "earned" once three additional
contingencies had been met: first, the plaintiff must have
accepted the commission plan; second, the plaintiff must have had
"eligible [q]uota [a]chievement"; and third, Plan Reconciliation,
"including but not limited to the review of any transactions deemed
to be Exception Transactions," must have been completed.
The plaintiff admits that he accepted and agreed to the
commission plan. He further admits that the plan's terms and
conditions spelled out the additional contingencies through which
his commissions would become "earned" and, thus, "due and payable,"
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including, for Exception Transactions, the completion of Plan
Reconciliation. Nor does he gainsay that the DXC and Barclays
deals were properly characterized as Exception Transactions.
Notwithstanding these admissions, the plaintiff insists
that his commissions were "due and payable" and — as such — under
the protective carapace of the Wage Act. In taking this stance,
the plaintiff posits that a portion of the terms and conditions
(specifically, the third contingency) is unenforceable under the
Wage Act because Plan Reconciliation, in practice, gives the
Company "unfettered authority to withhold pay" through commission
adjustments. The Company counters that all of the terms and
conditions, including the Plan-Reconciliation contingency, are
enforceable under the Wage Act; that the plaintiff's claimed
commissions could not be deemed "earned" unless and until they
were upheld at the Plan-Reconciliation stage; and that the only
commissions on the DXC and Barclays deals that were "due and
payable" were those approved through Plan Reconciliation.
We find the Company's arguments more persuasive. Under
Massachusetts law, employers and employees may agree to
contingencies that must be satisfied before commission payments
become due and payable such that they qualify as protected earnings
for Wage Act purposes. See id. The terms and conditions to which
the plaintiff and the Company mutually agreed provided that — in
the event a transaction was determined to be an Exception
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Transaction — commissions would not be "earned" unless and until
Plan Reconciliation had taken place. In furtherance of this
provision, those terms and conditions spelled out that the office
of Plan Reconciliation was to determine whether there would be
adjustments to the employee's commission calculation. The terms
and conditions imposed no limits on the extent of those
adjustments. And under the plain terms of the parties' agreement,
Plan Reconciliation was a contingency which had to be met before
a commission on an Exception Transaction was due and payable.
Although the plaintiff originally agreed to this
arrangement, he now attacks it. He says that the Plan-
Reconciliation contingency should be disregarded because it gives
the Company unfettered discretion to adjust commissions on any
transaction without limit. He attempts to draw support from the
terms and conditions, which defined the Plan-Reconciliation
contingency as "including but not limited to the review of any
transactions deemed to be Exception Transactions."
The plaintiff's attack misses the mark. There is not a
shred of evidence that the Company ever used Plan Reconciliation
to adjust commissions on any transactions other than those that
were deemed to be Exception Transactions. Rather, the evidence
shows that adjustments were made to commissions through Plan
Reconciliation only after particular transactions had been
classified as Exception Transactions. Exception Transactions were
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thus in a class of their own, defined by the terms and conditions
to encompass only atypical deals. Membership in that class was
determined by whether a given transaction included some unusual
element or elements, examples of which were the top ten customer
deals within a quarter, deals in which the value exceeded the
employee's assigned quota, and deals with "atypical management
involvement." It is reasonable that different criteria would
affect an employee's entitlement to commissions with respect to
atypical transactions (where applying standard commission rates
could easily lead to windfalls). And both the DXC and Barclays
transactions were — as the plaintiff concedes — appropriately
deemed Exception Transactions based on the criteria limned in the
terms and conditions.
We add, moreover, that the plaintiff received a salary
as well as standard commissions on typical transactions. Only
after the DXC and Barclays transactions were deemed Exception
Transactions did the Company's right to adjust the commission
structure come into play (to account for the atypical nature of
the transactions). So viewed, the fact that there was discretion
in the calculation of commission adjustments for that limited class
of transactions does not allow the Company the free rein over
commissions that the plaintiff ascribes to it. And at any rate,
nothing in Massachusetts law prevents commission arrangements from
incorporating subjective criteria. See Vonachen v. Comput.
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Assocs. Int'l, 524 F. Supp. 2d 129, 134-35 (D. Mass. 2007)
(enforcing provision giving employer "explicit discretion" to
adjust commissions for large transactions); see also Daly v. T-
Mobile USA, Inc., 110 N.E.3d 1220, *5 (Mass. App. Ct. 2018)
(unpublished opinion) (concluding that provision in employment
manual allowing employer to adjust commission formula before
commissions became "due and payable" was enforceable).
In an effort to pump the brakes on this reasoning, the
plaintiff relies on the decision in McAleer v. Prudential Insurance
Co. of America, 928 F. Supp. 2d 280. But the plaintiff reads
McAleer through rose-colored glasses and — read through untinted
lenses — McAleer does not gain him any traction.
The McAleer court acknowledged that a commission plan
could incorporate discretion as to "factual determinations,
calculations, and eligibility" regarding commissions. Id. at 288.
There, however, the employer argued that the terms of the
applicable plan granted it even more discretion than those terms
actually allowed. See id. The court did not hold — as the
plaintiff's cherry-picked excerpts tend to indicate — that
contingencies incorporating broad discretion will not be enforced
according to their tenor.
The short of it is that the Company's commission plan
did not violate the Wage Act. Under that plan, the plaintiff's
commissions on Exception Transactions were not earned (and, thus,
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not due and payable) until the Company had completed Plan
Reconciliation. Consequently — as the district court ruled —
"[a]ny potential commissions on those deals, prior to the
occurrence of a [P]lan [R]econciliation, would . . . not qualify
as wages under the statute." Klauber, 599 F. Supp. 3d at 47-48
(emphasis in original).
2
The plaintiff does not go quietly into this dystopian
night. He raises (or at least suggests) a plethora of other
arguments aimed at resuscitating his Wage Act claims. Without
exception, these arguments are unpersuasive, undeveloped, or in
some instances, both unpersuasive and undeveloped. We reject them
out of hand, pausing only to offer three brief comments.
As a start, the plaintiff invokes yet another provision
of the Wage Act: the "special contract" provision. Under this
provision, "[n]o person shall by a special contract . . . exempt
himself from" the Wage Act. Mass. Gen. Laws ch. 149, § 148. The
plaintiff asserts that this proviso renders the terms and
conditions ancillary to his commission plan unenforceable because
requiring commissions to go through Plan Reconciliation gives the
Company the ability to "withhold commission payments after an
employee has completed work on the deal."
We do not agree. As we have said, commissions only
qualify as wages under the Wage Act once they are "due and
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payable." Commissions are not necessarily due and payable simply
because "an employee has completed work on the deal." After all,
a commission plan may incorporate other contingencies that must be
met before a commission is due and payable — and if those
contingencies are not met, the commissions do not become wages
protected by the Wage Act. See Ellicott, 906 F.3d at 169-70,
(construing Massachusetts law); Parker, 139 N.E.3d at 333.
In all events, Massachusetts courts have been
consentient in holding that the special contract provision only
bars agreements to exempt wages from the prophylaxis of the Wage
Act. See Weems v. Citigroup Inc., 900 N.E.2d 89, 93 n.9 (Mass.
2009) ("Because of our conclusion that the [compensation] at issue
here do[es] not constitute wages under the [A]ct, the special
contract provision does not apply."); see also Camara v. Att'y
Gen., 941 N.E.2d 1118, 1121 (Mass. 2011) (explaining that special
contract provision prohibits employers from withholding payment of
"any earned wages" (emphasis omitted)). Thus, if compensation
does not qualify as wages under the Wage Act, the special contract
provision does not apply at all. So it is here.
Arguing for a different rule, the plaintiff relies on
the decision in Crocker v. Townsend Oil Co., 979 N.E.2d 1077 (Mass.
2012). His reliance is mislaid. The Crocker court held that a
general release of claims included in a termination agreement would
violate the special contract provision, but that a retrospective
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release of Wage Act claims would be enforceable so long as it was
"voluntary and knowing" and included "express language that Wage
Act claims [we]re being released." Id. at 1079-80. Crocker has
no discernable bearing on the issues before us.
The plaintiff's other arguments fare no better because
all of them depend on the incorrect premise that the contingencies
in the terms and conditions ancillary to the plaintiff's commission
plan are unenforceable. For example, the plaintiff claims that
the Wage Act required his commissions to be paid promptly after he
met "all the required contingencies for commission payment by
completing the work assigned and meeting the sales quotas outlined
in [his] individual compensation plan." But the terms and
conditions explicitly delineate other contingencies, and courts
must enforce other valid contingencies to which the parties have
agreed. See Ellicott, 906 F.3d at 170.
By the same token, there is no merit to the plaintiff's
claim that the district court erred in concluding that he had only
"limited involvement," Klauber, 599 F. Supp. 3d at 41-42, in the
DXC and Barclays transactions (in which he claims he played a "key
role"). Any factual dispute regarding his role, though, is
immaterial to his legal claim. The case might be different, say,
if the plaintiff had brought a claim under the implied covenant of
good faith and fair dealing that inheres in every contract and
alleged that the Company "violate[d] [his] reasonable
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expectations" while performing the Plan Reconciliation. Chokel v.
Genzyme Corp., 867 N.E.2d 325, 329 (Mass. 2007). Here, however,
the plaintiff's only claim is that the potential commissions should
be considered wages owed. That claim fails on the basis that the
commission adjustments made by the Company were allowed under
Massachusetts law.
To say more about the plaintiff's Wage Act claims would
be to paint the lily. It is clear that the terms and conditions
agreed to by the parties set valid contingencies that had to be
met before a commission could be earned. Until those contingencies
were satisfied, any potential commissions did not become due and
payable and, thus, did not qualify as "wages" within the purview
of the Wage Act. The plaintiff's Wage Act claims therefore fail.
3
This brings us to the plaintiff's final assignments of
error: that the district court erred in granting summary judgment
on his claims for breach of contract, unjust enrichment, and
quantum meruit. These assignments of error are plainly without
merit.
To show a breach of contract, "the plaintiff must prove
that a valid, binding contract existed, the defendant breached the
terms of the contract, and the plaintiff sustained damages as a
result of the breach." Minturn, 64 F.4th at 14 (quoting Young v.
Wells Fargo Bank, N.A., 828 F.3d 26, 32 (1st Cir. 2016)) (applying
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Massachusetts law). Here, the plaintiff's breach of contract claim
is nothing more than a reframing of his Wage Act claims. He argues
that the Company violated his individualized commission plan by
failing to honor the commission calculations required thereunder.
But the plaintiff has not even tried to explain why the commission
adjustments made by the Company violated the terms and conditions
that explicitly authorized commission adjustments for Exception
Transactions.
Stripped of rhetorical flourishes, the plaintiff's
argument in this respect relies entirely on the premise that the
terms and conditions ancillary to his commission plan are
unenforceable. And it is evident to us — as it was to the district
court, Klauber, 599 F. Supp. 3d at 48 — that the terms and
conditions were enforceable. See supra Part II(B)(1). The
plaintiff's alternative argument that he did not intend to be bound
by the terms and conditions is similarly unavailing. See Greene,
794 F.3d at 147 ("[T]he formation of a valid contract under
Massachusetts law requires objective, not subjective, intent.");
see also supra Part II(A). It follows that summary judgment in
favor of the Company was appropriate on the plaintiff's breach of
contract claim.
The plaintiff's unjust enrichment and quantum meruit
claims also fail. Neither unjust enrichment nor quantum meruit is
an available avenue of recovery when a valid contract governs the
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parties' obligations. See Metro. Life Ins. Co. v. Cotter, 984
N.E.2d 835, 849 (Mass. 2013); Bos. Med. Ctr. Corp. v. Sec'y of
Exec. Off. of Health & Hum. Servs., 974 N.E.2d 1114, 1132 (Mass.
2012); see also Klauber, 599 F. Supp. 3d at 48-49. That is the
case here.
III
We need go no further. For the reasons elucidated above,
the judgment of the district court is
Affirmed.
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