450 Mass. 281 | Mass. | 2007
The plaintiff seeks declaratory relief and monetary
1. The complaint alleges the following facts, which we accept, together with any favorable inferences reasonably drawn therefrom, as true for purposes of this appeal. See Ginther v. Commissioner of Ins., 427 Mass. 319, 322 (1998). We do not, however, accept or set forth “legal conclusions [in the complaint] cast in the form of factual allegations.” Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000). See Papasan v. Allain, 478 U.S. 265, 286 (1986). In 1997, Putnam created a plan whereby its key employees, and those of its subsidiaries, could choose to receive shares of the company’s Class B common stock.
The plaintiff, who was employed at the time by Management, became a plan participant in March, 1999. By the fall of 2001, the redemption price of the stock was $108.84 per share, which was near its all-time high value. As a consequence, the plaintiff offered his shares for repurchase pursuant to the terms of the plan. The plaintiff considered the ownership and redemption rights in Class B common stock in Putnam to be material terms of his employment contract.
On January 28,2002, Putnam’s then chairman and chief executive officer, Lawrence J. Lasser, issued a memorandum to participants in the plan (the Lasser memorandum also is attached to the plaintiff’s complaint) announcing Putnam’s adoption of a new “informal policy” to “encourage recipients to hold Putnam equity.”
The plaintiff understood the Lasser memorandum as an implicit threat that any attempt to resell the shares, for reasons other than those set forth as acceptable in the memorandum, would seriously jeopardize his employment relationship with Putnam. He asserts that the memorandum was designed to intimidate him (and other plan participants) into surrendering his contractual right under the plan to tender his vested shares for redemption. As a result of the memorandum, the plaintiff refrained from
The plaintiff tendered all his vested shares for sale to Putnam on leaving the company in March, 2003, as the plan required him to do. By that time, the redemption price of the stock had fallen to $39.57. The plaintiff claims that had he not been deterred in 2002 by the Lasser memorandum from redeeming his shares in accordance with his rights under the plan, he would have realized $35,562.50 more on the sale of his shares. The plaintiff’s complaint alleges that the defendants, by issuing the Lasser memorandum and thereby preventing him from reselling his shares of Class B common stock to Putnam, violated his employment contract. We now consider whether the judge’s dismissal of the complaint for failure to state a claim was warranted.
2. Under the established standard by which a motion pursuant to rule 12 (b) (6) is decided, the complaint will survive if it appears that the plaintiff may be entitled to relief, “even though the particular relief he has demanded and the theory on which he seems to rely may not be appropriate.” Nader v. Citron, 372
It is true, as the plaintiff points out, that the language of the plan provided no restriction on his right to tender any portion of his vested shares for redemption by Putnam, other than the temporal provision that any tender, for nonemergency purposes, must take place during certain windows of time. The plaintiff in his complaint, however, overlooks other language in the plan that is clearly relevant and, in our view, dispositive of his claim. That language provides that “Putnam shall have no obligation to purchase such Class B Shares” tendered by employees for
The plaintiff fares no better under the law of implied covenant of good faith and fair dealing, a common-law doctrine applicable to every contract in Massachusetts. See Anthony’s Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 473 (1991). We recently had occasion to consider the doctrine in the context of a motion to dismiss a complaint filed by a holder of stock in a biotechnology corporation’s biosurgery division against the corporation and its individual directors. See Chokel v. Genzyme Corp., 449 Mass. 272, 276 (2007). We stated that “[t]he purpose of the implied covenant is to ensure that neither party interferes with the ability of the other to enjoy the fruits of the contract, [Anthony’s Pier Four, Inc. v. HBC Assocs., supra at 471-472], and that, when performing the obligations of the contract, the parties ‘remain faithful to the intended and agreed expectations’ of the contract, Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). A breach occurs when one
The complaint in the Chokel case alleged that the defendant directors committed a breach of the covenant of good faith and fair dealing implied in the defendant corporation’s articles of organization when they publicly announced an exchange of bio-surgery stock for shares of general division stock. The plaintiff alleged that the timing of the announcement was designed to maximize the financial benefit to the individual directors, as shareholders of general division stock, and resulted in a substantial financial loss to the plaintiff. See id. at 273-274. While Chokel’s factual context differs from the present case, the question to be resolved is similar, and our discussion in the Chokel case directs our answer to the question whether the plaintiff has a cause of action for breach of the implied covenant. He does not.
The plaintiff could not reasonably have understood, or expected, that Putnam was obligated to purchase vested shares tendered by employees during the semiannual periods of time or otherwise. The plaintiff, who was professionally employed in the investment industry, must have been fully aware of the restrictive language in the plan.
We now consider whether the Lasser memorandum is susceptible to the subjective interpretation assigned it by the plaintiff.
Judgment affirmed.
The plaintiff in his complaint purports to represent members of a class of similarly situated employees and seeks certification of that class, pursuant to Mass. R. Civ. P. 23, 365 Mass. 767 (1974). The plaintiff, however, has filed no motion for class certification. In allowing the defendants’ motion to dismiss the complaint, the judge did not find it necessary to address the merits of the certification issue. Nor do we.
The plaintiff asserts in his complaint that Putnam Investments, Inc. (Putnam), a Massachusetts corporation, is a majority-owned subsidiary of Marsh & McClennan Companies, Inc., a Delaware corporation, and that, at all times relevant to this action, he was employed by Putnam or one of its subsidiaries, including the defendant Putnam Investment Management, LLC (Management), a Massachusetts limited liability company.
“Putnam” is defined in the document entitled “Putnam Investments, Inc., Equity Participation Plan” as “Putnam Investments, Inc.”
The entire text of the memorandum, which was from Lawrence J. Lasser to the plaintiff, dated January 28, 2002, and entitled “MEMORANDUM — PERSONAL & CONFIDENTIAL,” reads as follows:
“In September, 1997, when the Putnam Equity Partnership Plan (EPP) was introduced, I wrote that we had created the Plan because:
‘Putnam’s goal has been to provide a means to give you real equity in the company you have helped create. It has been to mix long-term motivation and rewards with short-term awards. It has been to provide you with a direct financial incentive to remain and grow with Putnam. The EPP advances these goals in better aligning the interests of the owners of the company with the interests of the people who have and will create value for the owners of the company, and to make them one.’
“As I look back on the Equity Partnership Plan from the perspective of four years of experience, I believe we have for the most part accomplished those goals. However, one aspect of the plan continues to prompt questions, the sale by plan participants of vested Putnam Class B shares. In trying to determine whether to develop a policy on this, we examined the practices of other companies. Some companies have equity ownership ‘targets’ they want their plan participants to achieve. Other companies require plan participants to hold a specified minimum percentage of the stock they were awarded.
“I prefer we not establish a fixed policy for Putnam, hoping instead EPP participants will understand the value of the Putnam equity they have been granted, while recognizing their ownership stake in Putnam is intended as a long-term investment. Thus, the informal policy is to encourage recipients to hold Putnam equity, also recognizing it may sometimes become necessary to sell a portion of equity to meet personal needs. One example might involve taxes. As you know, the vesting of restricted Class B shares results in a taxable event. The sale of a portion of equity to meet tax withholding requirements could then become necessary for some people. A sale of this type is acceptable and will not be questioned. We ask that prior to selling any Putnam equity during a window period for reasons other than meeting tax obligations, you discuss the reasons behind such a sale with your Operating Head. I have asked T. Hoffman to track sales of equity to allow us to develop a better understanding of why people reduce or divest their Putnam equity holdings, given the now better clarified view that Putnam equity is awarded as a long-term incentive vehicle.”
The only facts appropriate for consideration in deciding a motion to dismiss are, as has been noted, those drawn from factual allegations contained within the complaint or within attached exhibits. See Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000). In deciding the motion in this case, in addition to examining the complaint, a copy of the plan, and the Lasser memorandum, as well as considering the arguments of the parties, the judge may have reviewed the plaintiff’s affidavit, which was filed in opposition to the defendants’ motion to dismiss. It is clear from the judge’s decision, however, that he did not rely on any matter contained in the affidavit, which provides legal arguments and conclusory statements, but adds nothing material to the facts already alleged in the complaint. As did the judge, we disregard the affidavit, and the alleged facts contained therein, in resolving this appeal. Its filing did not convert the challenged judicial determination into one for summary judgment under Mass. R. Civ. P. 56, as amended, 436 Mass. 1404 (2002). See Stop & Shop Cos. v. Fisher, 387 Mass. 889, 892 (1983) (“category of ‘matters outside the pleading’ is broad, but even when construed broadly, such matters must provide some relevant factual information to the court”); Orion Ins. Co. v. Shenker, 23 Mass. App. Ct. 754, 757 (1987) (no conversion where affidavits failed to provide factual information relevant to determination of motion under Mass. R. Civ. P. 12 [b] [6], 365 Mass. 754 [1974]).
The defendants’ motion to dismiss was filed on August 3, 2004, and allowed by the judge on December 16, 2004. On May 21, 2007, the United States Supreme Court issued its decision in Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007), a case in which the Court was called on to evaluate the adequacy of pleadings alleging an antitrust conspiracy, in violation of the Sherman Act, 15 U.S.C. § 1 (2000). The Court noted, id. at 1968, quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that the traditional formula for review of a complaint challenged by a motion filed pursuant to Fed. R. Civ. P. 12 (b) (6), often recited as “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief,” would, if understood literally, lead to the survival of “a wholly conclusory statement of claim [on the] possibility that a plaintiff might later establish some ‘set of [undisclosed] facts’ to support recovery.” Bell Atl. Corp. v. Twombly, supra. A more appropriate inquiry, the Court suggested, is whether facts alleged in the complaint “raise a right to relief above the speculative level ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 1965, citing 5 C.A. Wright & A.R. Miller, Federal Practice and Procedure § 1216, at 235-236 (3d ed. 2004). The Bell Atlantic case does not affect our resolution of this case, because the decision followed the dismissal of the plaintiff’s complaint. In a future case, we may consider whether we should adopt the Bell Atlantic standard for application to complaints that are the subject of a motion to dismiss pursuant to Mass. R. Civ. P. 12 (b) (6).
The plaintiff does not allege that he was unaware of the terms of the plan, nor could he do so. A separate agreement (which is attached to the complaint as part of the plan) provides, among other things, that a participant thoroughly has reviewed the terms and conditions of the plan. The plaintiff alleges only that we should disregard the unambiguous terms of the plan in favor of (what he alleges to be) an alternate, more practical understanding between the par
We reject the defendants’ argument that a claim for violation of the covenant
Principles governing stockholders in close corporations have no bearing on the plaintiffs claim. Nor do we consider relevant the plaintiff’s reliance on the factual assertions that stock in Putnam and ownership interests in Management are closely held and not publicly traded, and that there is no market for the purchase and sale of equitable interests or shares of stock in either entity.
