764 F.3d 64
1st Cir.2014Background
- Michael Dinan, a Maine resident, worked as a salesman for California-based Alpha Networks under a 2005 written employment letter that included a California choice-of-law clause and a commission structure.
- Alpha sent a revised 2008 compensation plan; no new plan for 2009 was ever announced, and Dinan received little or no commissions for 2009–2010.
- Dinan sued in Maine state court; the case was removed to federal court. At trial the jury found no enforceable promise to pay commissions for 2009–2010 but awarded Dinan $70,331.93 in quasi-contract (unjust enrichment) damages and found Alpha failed to pay wages/commissions.
- Post-trial, the parties disputed whether California law (per the 2005 choice-of-law clause) or Maine law governed augmentation of the jury award: under California law Dinan would get 30 days’ wages (~$7,799.97) as liquidated damages; under Maine law he would be entitled to treble (double additional) liquidated damages, attorneys’ fees, costs, and prejudgment interest.
- The district court applied California law and denied trebling and Maine attorneys’ fees; Dinan appealed. The First Circuit vacated and remanded, finding Maine law likely governs enforcement of the quasi-contract award and that prejudgment interest should be calculated on the full judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2005 choice-of-law clause (California) governs Dinan’s quasi-contract claim | Dinan: the clause governs only interpretation/enforcement of the 2005 letter; the jury’s quasi-contract finding enforces an obligation outside that letter, so Maine law controls | Alpha: the clause should apply to contract-related claims (including quasi-contract) and thus California law governs remedies | Held: The clause is limited to the 2005 letter; the jury found liability independent of that letter, so Maine substantive law governs enforcement of the quasi-contractual obligation. |
| Which state’s law applies to remedies for quasi-contract/unpaid wages (choice-of-law) | Dinan: Restatement §196 principles point to the law of the state where services were rendered (Maine) | Alpha: services/payment obligations were largely connected to California because Alpha operated there | Held: Applying Restatement §196 principles (and Maine policy protecting employees), Maine law likely governs because Dinan rendered most services from Maine. |
| Whether prejudgment interest should apply to the full judgment including liquidated damages | Dinan: prejudgment interest under Maine’s general statute (§ 1602-B) applies to the entire judgment (compensatory plus liquidated damages) | Alpha: Maine wage statute (§ 626) implies interest applies only to unpaid wages (not liquidated damages) | Held: Prejudgment interest applies to the entire judgment under §1602-B; trial court retains discretion to waive interest for good cause. |
Key Cases Cited
- Robidoux v. Muholland, 642 F.3d 20 (1st Cir.) (standards for de novo review of legal issues)
- Samaan v. St. Joseph Hosp., 670 F.3d 21 (1st Cir.) (applying state law as the state’s highest court would)
- Ne. Data Sys., Inc. v. McDonnell Douglas Computer Sys. Co., 986 F.2d 607 (1st Cir.) (applying contractual choice-of-law to related noncontract claims)
- Paffhausen v. Balano, 708 A.2d 269 (Me.) (quasi-contract involves services provided under an implied contract)
- Schroeder v. Rynel, Ltd., 720 A.2d 1164 (Me.) (Maine’s approach to contractual choice-of-law clauses)
- Avery v. Kennebec Millwork, Inc., 861 A.2d 634 (Me.) (prejudgment interest: §1602-B governs calculation on the judgment)
- Dinan v. Alpha Inc., 60 A.3d 792 (Me.) (Law Court: §626 applies to quasi-contract damages when services are of the type for which wages would be due)