450 F.Supp.3d 20
D. Mass.2020Background
- Plaintiff Matthew Fine worked for Guardian and its subsidiary Park Avenue Securities as a field/registered representative based in Framingham, Massachusetts, selling insurance and earning substantial renewal commissions.
- He was engaged under two written agreements (FRA and RRA) that characterized him as an independent contractor/at-will and included New York choice-of-law clauses and termination provisions.
- In May 2018 Plaintiff was accused of alleged sexual misconduct at a hotel (no criminal charges), was barred from a company conference, and received a termination letter; Defendants did not report misconduct on his FINRA Form U5.
- Plaintiff sued for breach of the implied covenant of good faith and fair dealing (seeking commissions/lost future compensation) and unjust enrichment; Defendants moved to dismiss.
- The court analyzed choice-of-law, found Massachusetts law applicable despite the contracts’ New York choice clauses, and denied the motion to dismiss as to both claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for contract-based claims | Massachusetts law should govern because applying New York law would defeat Mass. public policy protecting wages | Contractual New York choice-of-law clauses control disputes "arising under" the agreements | Court applied Restatement §187 framework, found New York had relationship but Mass. has materially greater interest; applied Massachusetts law |
| Breach of implied covenant (at-will termination) | Fine alleges termination intended to deprive him of earned renewal commissions (Fortune/Gram theories) | Enforcement of contract terms bars claim; at-will termination is permitted | Complaint plausibly states a Fortune/Gram claim; denial of dismissal because motive and good-cause are factual questions |
| Damages recoverable under Fortune/Gram | Seeks future renewals and related economic harms tied to past services | Some requested damages (reputation, speculative future services) are legally unavailable | Court limited by law but declined to resolve damages now; some categories (e.g., reputation) likely unavailable, others premature to decide |
| Unjust enrichment (alternative claim) | Alternatively, Defendants were unjustly enriched by retaining commissions earned by Fine | Claim is duplicative of contract-based claim and barred by the written agreements | Court allowed alternative unjust enrichment claim to proceed at pleading stage; possible later dismissal if contract clearly controls |
Key Cases Cited
- Fortune v. Nat'l Cash Register Co., 364 N.E.2d 1251 (Mass. 1977) (establishes that terminating an at-will employee to deprive them of earned or forthcoming compensation may breach the implied covenant)
- Gram v. Liberty Mut. Ins. Co., 429 N.E.2d 21 (Mass. 1981) (extends Fortune to allow recovery when lost compensation is clearly related to past service even absent bad faith)
- Wakefield v. N. Telecom, Inc., 769 F.2d 109 (2d Cir. 1985) (Second Circuit recognized recovery where at-will employee was terminated to avoid paying earned commissions)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (U.S. 1941) (federal courts sitting in diversity must apply forum state choice-of-law rules)
- Melia v. Zenhire, Inc., 967 N.E.2d 580 (Mass. 2012) (Massachusetts Wage Act embodies fundamental public policy protecting employee compensation)
- Awuah v. Coverall N. Am., Inc., 952 N.E.2d 890 (Mass. 2011) (contract terms that would violate public policy are unenforceable)
- Feeney v. Dell Inc., 908 N.E.2d 753 (Mass. 2009) (describes Massachusetts two-tier choice-of-law test and Restatement §187 approach)
- Suzuki v. Abiomed, Inc., 943 F.3d 555 (1st Cir. 2019) (discusses Fortune/Gram standards and that good-cause determinations are factual)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for surviving a Rule 12(b)(6) motion)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (clarifies pleading standard requiring factual plausibility)