In this case, we are asked to decide whether G. L. c. 149, §§ 148 and 150 (Wage Act), are intended to be the exclusive remedy for the recovery of unpaid wages under Massachusetts law, preempting common-law breach of contract and related quasi-contract claims. We conclude that they are not.
1. Background. We review the allowance of a motion to dismiss de novo, accepting as true all factual allegations in the complaint and favorable inferences drawn therefrom. Curtis v. Herb Chambers 1-95, Inc.,
Plaud founded the Heritage Center in 2004 for the purpose of establishing a museum to showcase his collection of memorabilia focused on President Franklin D. Roosevelt. Just prior to the Heritage Center’s opening, Plaud offered Lipsitt the position of museum director, and the parties agreed that Lipsitt would be
The Heritage Center experienced financial difficulties from its inception. Lipsitt never received the full salary due to him under the contract, but continued to work for the Heritage Center based on Plaud’s continuing representations to Lipsitt that the arrearages would be paid in full once debts owed to Plaud by third parties were paid. Most of the salary Lipsitt did in fact receive was paid from Plaud’s personal checking account. Based on his desire to see the Heritage Center succeed and his belief that Plaud would honor his repeated promises to pay the back salary in full, Lipsitt continued to work for the Heritage Center through the summer of 2007.
In July, 2007, the city of Worcester, which owned the building where the Heritage Center was located, decided not to renew its lease with the Center and the Center closed its doors. Initially, Plaud intended to reopen the Center at a new location in Chicopee in late 2007, and Lipsitt continued to work for the Center performing tasks relative to the intended relocation. Ultimately, Plaud abandoned the relocation plan, and the Center never reopened.
On September 17, 2008, Lipsitt filed a complaint with the Attorney General for nonpayment of wages pursuant to G. L. c. 149, § 150. On April 22, 2010, after an investigation, the Attorney General settled various Wage Act complaints with the Heritage Center and, on the same day, issued Lipsitt a right-to-sue letter. Lipsitt filed this action in Superior Court on September 20, 2010, seeking damages of approximately $117,500, a figure that apparently represents the roughly $127,000 he claims he is owed, minus the $9,000 in restitution he received from the Heritage Center pursuant to the terms of its settlement with the
The defendants moved to dismiss the complaint in its entirety pursuant to Mass R. Civ. P. 12 (b) (6),
2. Discussion, a. Dismissal of common-law claims. The Wage Act requires “[ejvery person having employees in his service” to pay “each such employee the wages earned” within a fixed period after the end of each pay period. G. L. c. 149, § 148. While acknowledging that there is “scant precedent” regarding whether the Wage Act preempts common-law claims for the recovery of unpaid wages, the motion judge nonetheless con-eluded that “[i]n enacting the Wage Act, the legislature created a comprehensive vehicle for recovering unpaid wages” and, accordingly, intended to preempt Lipsitt’s common-law claims. We disagree.
“It is well established that ‘an existing common law remedy is not to be taken away by statute unless by direct enactment or necessary implication.’ ” Eyssi v. Lawrence,
“The purpose of the Wage Act is ‘to prevent the unreasonable detention of wages.’ ” Melia v. Zenhire, Inc.,
Thus, despite the arguably “comprehensive” nature of the Wage Act in its current form, the earliest the Legislature collectively could have formed or manifested an intent to preempt common-law remedies was on the creation of the private right of action by the 1993 amendments. Unfortunately, the legislative record of the 1993 amendments sheds little light on the question. Instead, it demonstrates that the driving force behind the 1993 amendments was a desire to transfer enforcement of the Wage Act from the Department of Labor and Industries (department) to the Attorney General, amid criticism that the department was not aggressively enforcing the Wage Act for political reasons.
Essentially, where there is no indication of legislative intent to preempt the common law, the question is one of practicality. We must decide whether the common-law remedy is preempted by “necessary implication.” Eyssi v. Lawrence,
In Passatempo v. McMenimen, supra, we considered whether a provision of G. L. c. 175, § 181, which grants to buyers of insurance the right of rescission against insurance companies whose officers or agents induced the sale of insurance by fraud, was intended to exclude other “long-standing” common-law remedies against insurance companies and their agents for fraud or misrepresentation. As to the right to bring suit against an agent individually, we reasoned:
“Given the Legislature’s expansion of the types of misrepresentation for which agents and employees could be criminally sanctioned, the heightened criminal sanctions it imposed on them, and its approval of expanded civil liability against the companies for which they sold insurance, it seems most unlikely that the Legislature intended to change course by insulating agents from this long-established right of action.”
Passatempo v. McMenimen, supra at 289. As to the ability of an insured to seek remedies other than rescission against the companies themselves, we stated: “[T]he Legislature’s desire to enhance deterrence makes it doubtful that the Legislature would have intended to preempt civil remedies other than rescission against insurance companies.” Id. Analogous in purpose to G. L. c. 175, § 181, the Wage Act is clearly intended to deter the nonpayment of wages through the imposition of enhanced penalties and remedies not available at common law. See Melia v. Zenhire, Inc., supra. Where, as is the case with the Wage Act, a statute is designed to enhance certain rights, we will not read it to abrogate common-law actions aimed at perfecting those same rights unless the statute requires such a reading by express language or necessary implication. Eyssi v. Lawrence, supra.
The minimal practical impact that the continued existence of a common-law right to recover unpaid wages will have on the enforcement scheme established by the Wage Act further supports our conclusion that the Wage Act does not preempt the common law by necessary implication. On this point, the defendants argue that the continued existence of a common-law cause
The fact that, in cases like the present one, an employer whose Wage Act liability for treble damages and attorney’s fees has been extinguished will nonetheless be exposed to simple contract liability for an additional three-year period is consistent with both the public policy objectives underlying the Wage Act and the status of an employment agreement as a contract like any other. In Crocker v. Townsend Oil Co.,
b. Dismissal of Plaud as a defendant. Lipsitt also challenges the dismissal of Plaud as a defendant on the ground that Lipsitt failed to plead sufficient facts to pierce the Heritage Center’s corporate veil and hold Plaud personally hable for the Center’s liabilities. A complaint “does not need detailed factual allegations” to survive a motion to dismiss for failure to state a claim, but “requires more than labels and conclusions” and must contain “ ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief.” Iannacchino v. Ford Motor Co.,
“Lipsitt has alleged only that ‘Plaud failed to observe the corporate formalities, paid Lipsitt from his personal checking account and otherwise co-mingled his personal business with that of the [Heritage Center].’ . . . This allegation is insufficient under [Iannacchino v. Ford Motor Co.]’s plausibility standard to establish Plaud’s individual liability under [Evans v. Multicon Constr. Corp.,30 Mass. App. Ct. 728 (1991)]. Therefore, Plaud must be dismissed as a defendant.”
Evans v. Multicon Constr. Corp., supra at 733, sets forth
Although the doctrine of corporate disregard is an equitable tool that is only to be employed by courts “in rare situations, to ignore corporate formalities, where such disregard is necessary to provide a meaningful remedy for injuries and to avoid injustice,” Attorney Gen. v. M.C.K., Inc., supra at 555, we are concerned today only with whether Lipsitt’s complaint contained sufficient factual allegations to survive a motion to dismiss this claim,
c. Denial of motion to amend. Alternatively, Lipsitt’s motion to amend his complaint to plead his veil piercing claim with more specificity should have been allowed. “A party may amend his pleading once as a matter of course at any time before a responsive pleading is served and prior to entry of an order of dismissal. . . . Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.” Mass. R. Civ. P. 15 (a),
The judge denied the motion to amend “for the reasons set forth in [Plaud’s] memorandum in opposition at pages 3-9 inclusive.” That section of Plaud’s opposition argued that the proposed amendment was futile where Lipsitt’s underlying common-law claims had already been dismissed as statutorily preempted, and where Lipsitt’s proposed amended complaint did not, in Plaud’s view, cure the deficiencies of the original complaint.
3. Conclusion. Because the Legislature did not intend the Wage Act to be the exclusive remedy for the recovery of unpaid wages, Lipsitt’s common-law claims for breach of contract and quantum meruit should not have been dismissed. Further, because Lipsitt pleaded sufficient facts to state a claim against Plaud on a theory of piercing the corporate veil — or, in the alternative, should have been allowed to amend his complaint in that regard — Plaud should not have been dismissed as a defendant. The judgment of dismissal is vacated, and the case is remanded to the Superior Court for further proceedings consistent with this opinion.
So ordered.
Notes
Cyrus D. Lipsitt also appeals from the judge’s dismissal of Joseph J. Plaud as a defendant in his individual capacity, on the ground that the complaint failed to plead sufficient facts to state a claim for piercing the corporate veil, as well as the judge’s denial of Lipsitt’s motion to amend his complaint to correct any deficiencies in the pleading of this theory of liability. The Wage Act provides for individual liability for corporate officers, see G. L. c. 149, § 148; Wiedmann v. The Bradford Group, Inc.,
The complaint alleges that the parties entered into a written agreement in August, 2004, but a copy of the contract included in the record indicates it was executed on October 14, 2004.
The exact date that Lipsitt terminated his employment with the Heritage Center is the subject of dispute, with the defendants contending it occurred on July 31, 2007, and Lipsitt contending it occurred sometime after that date.
The defendants also moved to dismiss the entire complaint, arguing that the settlement with the Attorney General operated as an accord and satisfaction of all of Lipsitt’s claims. The motion judge correctly rejected this argument, with the caveat that Lipsitt’s eventual recovery would be reduced by the amount of restitution paid to him under the settlement agreement. Lipsitt was not a party to the Attorney General settlement, and the settlement agreement itself stated that the agreement “shall not bind any other private or governmental entity.”
Lipsitt does not appeal from the dismissal of his fraud and G. L. c. 93A claims.
Examples of express statutory preemption of the common law can be found in the statute prohibiting unlawful discrimination, G. L. c. 151B, § 9, which provides: “the administrative procedure provided in this chapter under section 5 shall . . . exclude any other civil action based on the same grievanee”; the Massachusetts Tort Claims Act, G. L. c. 258, § 2, which states: “The remedies provided by this chapter shall be exclusive of any other civil action or proceeding by reason of the same subject matter”; and the workers’ compensation statute, G. L. c. 152, § 24, which states: “An employee shall be held to have waived his right of action at common law or under the law of any other jurisdiction in respect to an injury that is compensable under this chapter, to recover damages for personal injuries, if he shall not have given his employer, at the time of his contract of hire, written notice that he claimed such right. . . .”
“The Legislature expanded th[e] group of industries covered over the next fifty years, until it adopted the present language covering ‘[e]very person having employees in his service’ . . . .” Melia v. Zenhire, Inc.,
As to the types of eligible compensation, St. 1943, c. 467,
“extended the Wage Act to cover commissions that are ‘definitely determined’ and ‘due and payable.’ See generally Okerman v. VA Software Corp.,69 Mass. App. Ct. 771 , 775-780 (2007). Statute 1966, c. 319, expanded the definition of holiday and vacation pay. See generally Electronic Data Sys. Corp. v. Attorney Gen.,454 Mass. 63 , 66-71 (2009).”
Melia v. Zenhire, Inc., supra at 171 n.7.
As to the remedies available, the Wage Act
“initially authorized levying a fine of between ten and fifty dollars. St.1886, c. 87, § 2. In St. 1929, c. 117, the Legislature added the alternative of imprisonment in a house of correction for up to two months. The Legislature gradually increased the limits of the fine in St. 1971, c. 590 (twenty to one hundred dollars); St. 1977, c. 664 (one hundred dollars to $500); and St. 1987, c. 559, § 29 ($500 to $3,000).”
Melia v. Zenhire, Inc., supra at 171 n.8. Statute 1998, c. 236, § 7, codified at G. L. c. 149, § 27C, “authorized punishment of up to $25,000 or imprisonment for one year for wilful violations, and $10,000 or six months imprisonment for nonwilful violations, with both penalties subject to enhancement for subsequent offenses.” Melia v. Zenhire, Inc., supra.
The current version of G. L. c. 149, § 150, reads, in pertinent part:
“An employee claiming to be aggrieved by a violation of [the Wage Act] may, 90 days after the filing of a complaint with the attorney general, or sooner if the attorney general assents in writing, and within 3 years after the violation, institute and prosecute in his own name and on his own behalf, or for himself and for others similarly situated, a civil action 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, as liquidated damages, for any lost wages and other benefits and shall also be awarded the costs of the litigation and reasonable attorneys’ fees.”
The amendment was passed over then Governor William Weld’s veto.
As the court in Mansfield vs. Pitney Bowes, Inc., U.S. Dist. Ct., No. 12-10131-DJC, slip op. at 6 (D. Mass. Mar. 12, 2013) (Mansfield), reasoned, and we agree, “[c]ases involving the Tips Act [G. L. c. 149, § 152A], the Wrongful Termination statute [G. L. c. 149, § 148A] and the Prevailing Wage statute [G. L. c.149, §§ 26-27] are situations where an employee would have no recognized cause of action but for the statutes’ imposition of obligations on employers.” General Laws c. 149, § 152A, requires that service charges collected from customers only be remitted to certain categories of employees. Because the “right to have service charges imposed by [a service employer] distributed only to certain categories of employees is created by [G. L. c. 149, § 152A,] and did not exist at common law,” common-law claims predicated on a violation of G. L. c. 149, § 152A, are “mere surplusage because they needlessly duplicate the remedies available under the statute.” Mansfield, supra, quoting Depina vs. Marriot Int’l, Inc., Suffolk Super. Ct., No. 03-05434-G, slip op. at 19 (July 28, 2009). Likewise, G. L. c. 149, § 148A, makes it unlawful for an employer to terminate an at-will employee for exercising his or her rights against that employer under the wage and hour laws, creating a cause of action not recognized at common law prior to the statute’s enactment. See Mello v. Stop & Shop Cos.,
Although we are not confronted with and do not decide the scope of the above cited statutes’ implied preclusion of common-law claims, we agree with the general proposition advanced by the defendants that a plaintiff should not be allowed to circumvent procedural or other requirements imposed by a particular statute by pleading a common-law cause of action that asserts a right created under that statute and not previously recognized at common law. Compare School Comm. of Boston v. Reilly, supra at 338-339 (statute imposing fine as sole remedy available against workers engaged in unlawful strike held not to preempt employer’s petition for injunctive relief where “the duty sought to be enforced is contractual in nature and is not wholly the creature of statute. . . . There is nothing in the enactment of [the statute that] would warrant the conclusion that this enactment was intended to restrict previously existing common law remedies for breach of contract in the employer-employee context”), with School Comm. of Lowell v. Mayor of Lowell,
We note that even in this case, where the Wage Act claims ultimately proved to be time barred, Lipsitt still filed a complaint with the Attorney General’s office.
However, where a complaint is filed within the three-year period for bringing claims under the Wage Act and the Wage Act plainly applies to all
Although an academic point, we note that “the doctrine of corporate disregard is not a cause of action but an equitable doctrine by which an act or obligation of a corporation giving rise to a cause of action may be charged to a principal of the corporation. . . .” Kraft Power Corp. v. Merrill,
The debts were impliedly owed to Plaud personally or in conjunction with another business venture, and had nothing to do with the Heritage Center.
Plaud’s opposition also argued that Lipsitt should not have been allowed